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Pound steady as Johnson takes commanding lead in Tory leadership race

currency-newsPound steady as Johnson takes commanding lead in Tory leadership race
The pound held steady on Thursday as MPs voted in the first ballot in the Conservative leadership selection.

Sterling is somewhat mixed this morning, with GBP/EUR dipping to €1.1225, GBP/USD slipping to $1.2665 and GBP/CAD completely unchanged at C$1.6896, while GBP/AUD and GBP/NZD are both up slightly at AU$1.8350 and NZ$1.9346 respectively.

In the spotlight today will be the publication of the latest US retail sales, with the US dollar likely to strengthen if sales growth rebounded in May as forecast.

What’s been happening?

The pound traded in a narrow range against the majority of its peers yesterday as markets reacted to the first round of voting in the Conservative leadership contest.

Boris Johnson emerged as the clear leader in the race to replace Theresa May, with the former foreign secretary topping the ballot with 114 votes.

While this did little to quell fears of the next PM adopting a more hardline stance on Brexit, Johnson’s clear lead does offer some more clarity to GBP investors tired of political opaqueness.

Helping the GBP/EUR exchange rate to remain in positive territory yesterday was the publication of the Eurozone’s latest industrial production figures, with another contraction in factory output in April dampening the appeal of the euro.

Meanwhile, the GBP/USD exchange rate was left on the defensive on Thursday as the US dollar was buoyed by rising safe haven demand as a result of explosions on two oil tankers in the Middle-East and clashes between police and protesters in Honk Kong.

What’s coming up?

Looking ahead, the focus today is likely to be on the release of the latest US economic data, with the US dollar poised to strengthen if domestic retail sales growth rebounded in line with expectations May.

Further support for USD may come with the accompanying industrial production figures, with economists forecasting that US factory output will also have returned to growth last month.

Meanwhile, offering GBP investors a temporary distraction from the ongoing political uncertainty in the UK, will be a speech by Bank of England (BoE) Governor Mark Carney later this afternoon, with markets looking for any hints that Threadneedle Street could still be planning to raise interest rates this year.

Finally, a lull in Eurozone data could limit momentum in the euro through the remainder of the week, with an increasingly gloomy outlook for the bloc potentially dragging on the single currency.
 
Philip McHugh

Philip McHugh

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)

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