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Pound mixed following initial release of Sue Gray inquiry

currency-newsPound mixed following initial release of Sue Gray inquiry
The pound wavered on Monday, following the preliminary release of the long-awaited Sue Gray report into Downing street lockdown breaches.

Sterling is mostly rangebound so far this morning, with GBP/EUR subdued at €1.1964 and GBP/USD firming to $1.3476. GBP/CAD is flat at C$1.7063, while GBP/AUD and GBP/NZD slip to AU$1.9017 and NZ$2.0417, respectively.

Looking ahead, will a lacklustre ISM manufacturing PMI dampen the appeal of the US dollar later this afternoon?

What’s been happening?

Trade in the pound was mixed yesterday, as the currency was unsettled by the initial release of the Sue Gray inquiry into the Downing Street ‘partygate’ scandal.

While this was not the full publication of the report due to an ongoing investigation by the Met, it found ‘failures of leadership’ at No 10 and could provide additional ammunition for MPs calling for Boris Johnson’s resignation.

The euro was able to edge higher at the start of this week, following the release of the Eurozone’s latest GDP figures.

While these revealed a sharp slowing of growth in the last quarter of 2021 amidst a surge in Covid cases across the continent, it also confirmed the bloc’s economy expanded by a robust 4.6% through the year.

At the same time, the US dollar trended lower on Monday, with the currency continuing to run afoul of some profit taking following last week’s hot streak, as well as being pressured by a modest improvement in market sentiment.

What’s coming up?

Turning to today’s session, the most high-profile data release will be the publication of the latest ISM manufacturing PMI.

January’s figures are expected to report another slowing of the US factory sector, which could act as a headwind for the US dollar later this afternoon.

In the meantime, data showing a much larger-than-expected contraction in German retail sales at the end of 2021 looks to already be putting some pressure on the euro this morning.

However, the finalised publication of the Eurozone's manufacturing PMI may help limit the downside in EUR exchange rates, if it confirms activity in the bloc’s factory sector accelerated last month.

Meanwhile, the release of the UK’s own manufacturing PMI may drag on the pound, as January’s finalised figures are likely to confirm growth slowed despite the lifting of most Covid restrictions.
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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