The Australian dollar trended lower through the majority of last week, with the risk-sensitive currency struggling to attract support as a gloomy market mood prevailed through most of the session.
Sterling remains muted this morning, with GBP/EUR flat at €1.1790, GBP/USD rangebound at $1.3095, and GBP/CAD stable at C$1.7088. GBP/AUD and GBP/NZD are holding steady at AU$1.9068 and NZ$1.9740 respectively.
In the spotlight today will be a speech by Bank of England (BoE) Governor Mark Carney. Will a dovish outlook from Carney exert some pressure on GBP exchange rates today?
What’s been happening?
The pound struggled to find momentum mid-week in light of renewed Brexit uncertainty.
The main drag on Sterling sentiment yesterday appeared to be a warning by European Commission President, Ursula von der Leyen, who questioned Boris Johnson’s timeframe for securing a trade deal with the EU.
Ahead of a meeting with the PM, von der Leyen suggested it would be ‘impossible’ for the UK to reach a comprehensive deal with the EU by the end of 2020, Johnson’s self-imposed deadline for agreeing a trade deal.
At the same time, the euro sank on Wednesday in response to some underwhelming German industrial data.
Germany reported factory orders unexpectedly contracted 1.3% in November, suggesting that the country’s manufacturing sector is still yet to bottom out and dampening hopes that Germany’s economy returned to growth at the end of 2019.
Meanwhile, the US dollar was able to find some support yesterday as it was bolstered by easing tensions between the US and Iran as well as a stronger-than-expected ADP employment report.
What’s coming up?
Looking ahead, the focus for markets today will be a speech by Mark Carney later this afternoon.
GBP investors will be hoping that the BoE Governor may drop some more hints about the bank’s policy plans, particularly now that the UK looks set to ratify a withdrawal deal with the EU, with any hints towards a rate cut likely to dent the pound.
Meanwhile, the euro appears to be on stronger footing this morning following the publication of Germany’s industrial production data, which (n contrast to yesterday’s factory order figures) showed an improvement in November.
Finally, for USD investors, the focus will turn to Friday’s non-farm payroll report, with Wednesday’s ADP figures buoying expectations for another solid rise in payroll numbers.
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)