The euro roared higher during yesterday’s session as markets cheered the EU’s proposals for a €750bn coronavirus recovery fund.
Sterling appears to be holding its ground so far today however, with GBP/EUR flat at €1.1514, GBP/USD muted at $1.2900 and GBP/CAD stable at C$1.7380, while GBP/AUD and GBP/NZD both hold steady at AU$1.8635 and NZ$1.9656 respectively.
In focus today will be the latest US retail sales figures, with the US dollar likely weakening if sales growth slowed in April as forecast.
What’s been happening?
The pound suffered another setback yesterday as it faced broad losses after a mixed domestic employment report.
While the UK’s unemployment rate was reported to have fallen to a new 44-year low in March, this was undermined by the accompanying earnings figures, which saw wage growth slow from 3.5% to 3.2% over the same period and dampen the appeal of Sterling.
However, helping to limit the losses in the GBP/EUR exchange rate yesterday was the publication of the latest ZEW economic sentiment index, which showed that confidence in the Eurozone economy weakened again this month as deteriorating global trade conditions weighed on sentiment.
Meanwhile, the GBP/USD exchange rate struck a two-week low on Tuesday as the continued focus on the US-China trade dispute left investors bullish on the safe-haven US dollar, despite Donald Trump striking a more conciliatory tone on trade in a series of tweets.
What’s coming up?
Looking ahead to today’s session, we may see USD exchange rates be a little more data driven, with the release of the latest US retail sales figures.
Barring any further developments in the US-China trade war, the US dollar is likely to find itself on the defensive later this afternoon as retail sales growth is forecast to have slowed sharply in April.
Meanwhile, in the absence of any notable UK economic data, any movement in the pound today is likely to come curtesy of Brexit developments, with Sterling sentiment set to weaken if there are any further signs that cross-party talks may collapse.
Finally, the euro looks to be off to a robust start this morning as German GDP was shown to have bounced back in the first quarter, dispelling any recession fears surrounding the Eurozone’s largest economy.
However, this will be followed by the release of the Eurozone’s quarterly employment report later this morning which could weaken the single currency if employment growth slowed in the first quarter as some analysts suspect.
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)