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Pound firms amid improving market sentiment

currency-newsPound firms amid improving market sentiment
The pound ticked higher on Monday, buoyed by a more positive market mood at the start of the week.

Meanwhile, Sterling is trading in a wide range this morning, with GBP/EUR buoyed at €1.1632 and GBP/USD sliding to $1.2073. GBP/CAD is muted at C$1.5540, while GBP/AUD and GBP/NZD climb to AU$1.7719 and NZ$1.9530, respectively.

Looking ahead, will dovish comments from the Bank of England (BoE) Governor Andrew Bailey place renewed pressure on GBP exchange rates today?

What’s been happening?

The pound got off to a solid start this week, with the currency benefitting from a notable improvement in market risk appetite.

However Sterling’s gains were tempered by ongoing Brexit jitters as tensions between the UK and EU over the Northern Ireland protocol continued to grow.

Meanwhile, trade in the euro was mixed on Monday. EUR exchange rates initially slipped on the back of Germany’s latest trade figures, after they reported the country’s trade surplus narrowed to an almost 30-year low.

But the single currency was able to cap its losses in light of comments from European Central Bank (ECB) policymaker Madis Muller as he suggested a 50bps rate hike in September would be appropriate. 

Meanwhile, the US dollar slipped in holiday-thinned trade yesterday as US markets closed for a federal holiday.

What’s coming up?

A speech by the Bank of England’s Andrew Bailey is likely to act as the primary catalyst of movement in the pound today. Will more dovish remarks from Bailey following the BoE’s latest financial stability report push Sterling lower?

Also potentially influencing GBP exchange rates will be the publication of the UK’s latest PMI figures. If June’s finalised services PMI is revised down similarly to the manufacturing index then the pound is likely to weaken.

The publication of the Eurozone’s own services PMI could limit the euro’s upside potential today as June’s final release is expected to confirm activity in the bloc’s private sector slowed to a five-month low.

Across the pond, the US dollar may recoup yesterday’s losses with the release of the latest US factory order figures, with order growth forecast to have accelerated in May.
Philip McHugh

Philip McHugh

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)

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