A -2.6% monthly GDP contraction weighed heavily on the pound as worries over the UK’s economic outlook picked up again.
Sterling is clinging to these gains so far this morning, with GBP/EUR stable at €1.1079 and GBP/USD buoyed at $1.2482. GBP/CAD is flat at C$1.6974, while GBP/AUD and GBP/NZD hold steady at AU$1.8035 and NZ$1.9204 respectively.
Coming up today, all eyes will be on the latest US payroll figures. Will another mammoth jump in employment help to bolster the US dollar?
What’s been happening?The pound struck higher during yesterday’s trading session, with Sterling able to maintain its upward trajectory thanks to some cautious market optimism.
This upbeat mood came in response to positive headlines regarding a possible coronavirus vaccine.
However, the pound’s gains were still capped by domestic issues, with GBP investors concerned by recent coronavirus developments in the UK as well as pessimism regarding Boris Johnson’s plans to revitalise the economy after Brexit.
The euro, meanwhile, was mostly rangebound on Wednesday in spite of some positive economic releases, including a record surge in German retail sales and an upwardly revised factory PMI from the Eurozone.
Finally, we saw the US dollar retreat yesterday as demand for the safe-haven currency was undermined by the improving market mood, leaving the ‘Greenback’ unable to strengthen on the back of a stronger-then-expected ISM manufacturing PMI.
What’s coming up?Looking ahead, the spotlight today will be on the highly influential US non-farm payroll figures.
This may help the US dollar recoup some of yesterday’s losses as economists forecast another big rebound in US employment growth last month, with expectations of a whopping 3 million jobs being added to the US economy through June.
EUR investors will also be paying close attention to the state of the jobs market today, with the euro likely to face some pressure this morning as the Eurozone’s latest employment figures are expected to report unemployment in the bloc surged to 7.7% in May.
At the same time, the pound may struggle to extend its rally through the second half of the week, as the latest round of Brexit trade talks is expected to come to a close without delivering any major breakthroughs.
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)