The pound edged away from a multi-year high at the end of last week as investors engaged in some profit taking.
Sterling has recorded some gains this morning however, with GBP/EUR rising to €1.1702, GBP/USD achieving $1.2949, and GBP/CAD pushing to C$1.7155. GBP/AUD and GBP/NZD are also trending higher at AU$1.9003 and NZ$2.0219 respectively.
UK politics will remain centre stage this week as GBP investors await the reaction to Labour’s election manifesto.
What’s been happening?
The pound was side-lined on Friday as a lull in domestic data turned the focus back towards UK politics.
Recent polling figures have shown that the Conservatives are extending their lead against Labour, but observers suggest the risks of a hung parliament remain and the prospect of this outcome is limiting any upside in Sterling.
Meanwhile, the US dollar slumped at the end of last week despite the US reporting a stronger-than-expected rebound in retail sales last month.
The broad losses in USD came as a risk-on mood prevailed in the latter half of the week, undermining demand for the safe-haven ‘greenback’.
This slump in the US dollar helped to buoy demand for the euro on Friday, with the single currency also being supported by expectations that Donald Trump would delay tariffs on European automotive imports again.
What’s coming up?
Looking to the week ahead, UK politics will continue acting as a key catalyst of pound movement.
The race for Downing Street is set to heat up again this week as Labour publishes its election manifesto.
This may trigger some volatility in Sterling if Labour’s policies resonate with voters and help the party narrow the gap with the Conservatives in the polls.
In focus for EUR investors this week will be the publication of the latest Eurozone PMI figures. Expect to see the euro come under pressure if they reveal growth in the bloc’s private sector remained near stagnation in November.
Finally, movement in the US dollar this week is likely to be dictated by the release of the minutes from the Federal Reserve’s most recent policy meeting.
USD investors will be hoping the minutes shed more light on the bank’s monetary policy plans, particularly regarding the chances of further monetary easing in 2020.
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)