The pound trended broadly lower through June, the currency being primarily undermined by concerns over the UK’s economic trajectory.
The pound is retreating from yesterday's gains this morning. GBP/EUR fallen -0.3% to €1.1334, while GBP/USD has inched down to US$1.3518. GBP/AUD has fallen -0.3% to A$1.7837, GBP/NZD has inched down -0.2% to NZ$1.9776, and GBP/CAD has dropped -0.4% to C$1.7383.
Although the pound was on buoyant form, its advance was somewhat scuppered by positive developments in the Eurozone and United States. Read on to find out what happened…
What’s been happening?
Positivity surrounding the likelihood of progress in the Brexit negotiations continued to boost pound demand yesterday.
It was also rumoured that the UK government was making headway with regards to the issue of the Irish border, lessening the chances of the nation vetoing any attempts to move on to trade this month.
Markets remained chirpy all day, despite the latest GfK consumer confidence index showing that household sentiment had fallen back to its worst levels seen since the Brexit referendum.
GBP/EUR was pressured lower throughout the day, although not without some resistance, thanks to a slew of largely positive Eurozone figures.
Although German retail sales posted an unexpected slump, the Eurozone unemployment rate fell to a nine-year low.
Eurozone consumer price growth failed to accelerate quite as far as economists had expected, clocking in at 1.5% rather than 1.6% in November.
However, core inflation - the more accurate of the two inflation measures - rose faster than expected, hitting 1.1%.
GBP/USD was able to end higher throughout the course of the day, despite some positive US data.
Demand for the euro depressed US dollar appetite, even though personal consumption expenditure figures showed a rise of 1.4% as expected, plus an unexpected upward revision to the previous growth rate, also to 1.4%.
What’s coming up?
Today’s UK Markit manufacturing PMI could cause significant volatility for the pound. Not only will markets be interested in the result from the point of view of the manufacturing sector, but also because strength or weakness here could hint at strength or weakness in the wider economy.
Therefore weak results from the PMI this morning could indicate that next week’s services PMI - the most important - will also slow.
Eurozone data set for release today are finalised versions of previous figures, so are unlikely to have much of an impact on the euro unless they deviate wildly from preliminary estimates.
The key US ISM manufacturing and employment indices will be released later and could boost the US dollar.
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)