The Australian dollar trended lower through the majority of last week, with the risk-sensitive currency struggling to attract support as a gloomy market mood prevailed through most of the session.
GBP/EUR has risen to €1.1894, GBP/USD has edged up to $1.3138, and GBP/CAD is trading in the region of C$1.7241. GBP/AUD and GBP/NZD are trading at AU$1.9167 and NZ$1.9820 respectively.
What’s been happening?
Comments from Chancellor Sajid Javid continued to stoke anxiety over Brexit yesterday, with markets spooked by the prospect of a divergence in standards between the UK and EU.
Until investors see positive signs of progress towards a future trade deal a sense of Brexit-based uncertainty looks set to keep the pound under pressure for the foreseeable future.
The euro remained under pressure in the wake of the European Central Bank’s (ECB) January policy announcement in spite of a lack of significant policy signals.
The surprising weakness of the Eurozone consumer confidence index put additional pressure on EUR exchange rates, meanwhile, as worries over the economic outlook picked up.
This morning the pound received a modest boost from the UK’s services and manufacturing PMIs.
Both indexes showed a better-than-forecast improvement, with the manufacturing index rising to 49.7 and the services measure printing at 52.9.
What’s coming up?
The euro may struggle to gain ground today with the Eurozone’s composite PMI for January coming in below forecasts at 52.2.
The pound, meanwhile, may continue to benefit from this morning’s UK data.
According to Markit Chief Business Economist Chris Williamson:
“The survey data indicate an encouraging start to 2020 for the UK economy. Output grew at the fastest rate for sixteen months amid rising demand for both manufacturing and services, suggesting business is rebounding after declines seen late last year. Intensifying political and economic uncertainty ahead of the general election has started to ease, encouraging more spending and helping push business expectations of future growth to its highest since mid-2015.”
Finally, the US dollar may edge higher before the weekend if the US manufacturing and services PMIs show the improvement forecast by economists.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)