The pound plummeted on Tuesday as the latest UK PMIs printed well below expectations.
Sterling is off to a slow start so far this morning, with GBP/EUR flat at €1.1715 and GBP/USD muted at $1.3202. GBP/CAD is rangebound at C$1.6906, while GBP/AUD and GBP/NZD hold steady at AU$1.8523 and NZ$1.9542, respectively.
Looking ahead, will an upbeat UK jobs report help GBP exchange rates to strengthen today?
The pound ticked higher at the start of this week, after Boris Johnson announced an ambitious plan to offer a booster jab to every adult in the UK before the end of the year, with GBP investors hoping the accelerated rollout will help the UK avoid needing to impose stricter restrictions.
What’s been happening?
However Johnson also refused to rule out the possibility that more restrictions could be needed before Christmas, something which saw Sterling pare a good portion of these gains by the end of the European trading session.
Meanwhile, the US dollar initially strengthened yesterday, buoyed by Federal Reserve rate hike bets and some Omicron uncertainty.
However, the 'greenback’ was unable to hold on to these gains for long, with USD exchange rates falling in tandem with US treasury yields later in the afternoon.
At the same time, the euro was muted amidst ongoing speculation the European Central Bank (ECB) may expand its asset purchase programme (APP) following its monetary policy meeting later this week.
Kicking off today’s session was the publication of the UK’s latest jobs report, with October’s release reporting domestic unemployment fell to 4.2%, despite the government’s furlough scheme having ended in September.
What’s coming up?
The upbeat figures could see the pound firm today as it might help to sustain the smallest glimmer of hope that the Bank of England (BoE) could hike interest rates this week.
Also in focus this morning will be the Eurozone’s latest industrial production reading. Will a rebound in factory output in the bloc in October be enough to bolster the euro?
For USD investors, the spotlight today will be on the US producer price index. If November’s release reports another rise in producer prices, it is likely to boost hopes the Fed will accelerate its monetary tightening.
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)