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Pound firms as Boris Johnson Resigns

currency-newsPound firms as Boris Johnson Resigns
The pound strengthened on Thursday as Boris Johnson resigned as Prime Minister following a turbulent 24 hours in UK politics.

Sterling has relinquished some of these gains this morning, with GBP/EUR dipping to €1.1808 and GBP/USD retreating to $1.1997. GBP/CAD is rangebound at C$1.5587, while GBP/AUD and GBP/NZD hold steady at AU$1.7567 and NZ$1.9449, respectively.

Coming up, will a drop in the latest US payroll figures lead the US dollar to soften today?

What’s been happening?

The pound trended higher yesterday, following the news that Boris Johnson would be stepping down as PM.

Johnson’s resignation was seen as GBP positive as it brings an end to questions over his future.

These gains were then reinforced by some hawkish comments from Bank of England (BoE) policymaker Catherine Mann.

The euro remained on the back foot on Thursday as EUR sentiment continued to be suppressed by fears of an impending Eurozone recession.

However, the single currency was able to avoid the sharp plunges seen in the previous two sessions as the minutes from the European Central Bank’s (ECB) June policy meeting revealed some members of the bank might favour a 50bps rate hike in July.

Meanwhile, the US dollar was left mostly rangebound yesterday, with the currency’s recent bullish run being curtailed by a modest improvement in market risk appetite.

What’s coming up?

Centre stage today is likely to be the latest release of the highly influential US non farm payroll figures.

June’s release is forecast to report a sizable drop in the number of jobs being added to the US economy. This could dent Federal Reserve rate hike bets and weaken the appeal of the US dollar later this afternoon.

In the meantime, the fallout from Johnson’s resignation is likely to act as the main catalyst of movement in the pound on Friday.

While Johnson’s resignation buoyed the pound yesterday, this may only have been a brief respite for Sterling as the race to replace Johnson as PM will give rise to fresh uncertainty.

Finally, the focus for EUR investors is likely to be on a speech by ECB President Christine Lagarde. Will a broadly hawkish tone from Lagarde help to prop up demand for the euro?
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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