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 is putting on a mixed performance this morning, with GBP/EUR flat at €1.1719 and GBP/USD muted at $1.2996, while GBP/CAD and GBP/NZD have edged up to C$1.6993 and NZ$1.9713 respectively. GBP/AUD has accelerated to AU$1.8971.
Centre stage today we have the publication of the UK’s latest employment report. Will slowing wage growth exert pressure on GBP exchange rates?
What’s been happening?
The pound struggled to find momentum at the start of this week’s session amid a renewed focus on Brexit.
This was in response to comments made by UK Chancellor Sajid Javid over the weekend.
Speaking to the Financial Times, Javid vowed the UK will leave the EU without alignment, sparking concerns about how this may disrupt the UK economy and limiting the appeal of Sterling.
The euro was also mostly rangebound yesterday, with EUR investors reluctant to alter their positions in the currency ahead of the European Central Bank’s (ECB) policy decision on Thursday.
Meanwhile, in spite of thin trade as US markets closed for Martin Luther King Day, the US dollar was able to maintain some of last week’s momentum and post some modest gains on Monday.
What’s coming up?
Looking ahead, the spotlight today will be on the UK’s latest employment report.
While unemployment is expected to have held at a near 45-year low in November, economists are forecasting wage growth will have slowed to its worst level in over a year.
This could weigh heavily on the pound this morning as yet another sign of a slowing economy is likely to increase pressure on the Bank of England (BoE) to cut interest rates this month.
Driving movement in the euro today will be the publication of the latest ZEW survey. The report could undermine the single currency if economic sentiment in the Eurozone is shown to have weakened again in January.
Finally, for USD investors the focus today will be on US politics, with the start of Donald Trump’s impeachment trial potentially infusing some volatility into 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)