The pound was turbo charged overnight on Thursday, with the currency flying high after the exit poll suggested the Conservatives were on track for a major win.
Trade in Sterling remains mixed this morning, with GBP/EUR flat at €1.1468, GBP/USD steady at $1.2880 and GBP/CAD holding steady at C$1.7045, while GBP/AUD and GBP/NZD both edge lower, striking AU$1.7877 and NZ$1.9100 respectively.
The focus for GBP investors may turn back to the UK economy today, with the pound potentially strengthening if wage growth remained robust in September, as expected…
What’s been happening?
The pound plummeted against the majority of its currency peers on Monday following signs that growing cabinet resistance to Theresa May’s Brexit plans could hamper the chances of a deal being finalised this week.
Reports suggested this opposition led to May shelving an emergency cabinet meeting at the start of the week amid suggestions that the UK and EU needed to hammer out a deal by Wednesday in order to secure a special EU summit in November.
Sterling was able to recoup some ground later in the session however as investors responded to reports that the EU was ready to present the main elements of a Brexit treaty to the UK cabinet on Tuesday.
However these losses weren’t reflected in the GBP/EUR exchange rate, as the ongoing budget dispute between Brussels and Rome left investors shunning the euro ahead of the EU’s final deadline today.
This political uncertainty in both the UK and Europe resulted in a marked upswing in demand for the safe-haven US dollar, which despite thin-trade due to the closure of US markets for Veteran’s Day, saw the GBP/USD exchange rate slump as much as 1% in trade on Monday.
What’s coming up?
Potentially offering the pound some relief from the recent flurry of Brexit headlines, the release of the UK’s latest labour report looks set to be the main catalyst for movement in GBP today.
While unemployment is expected to have held at a 43-year low in September the main focus for investors is likely to be on the accompany wage figures, with Sterling potentially strengthening if the recent bump in wage growth carried through to the end of the third quarter.
Meanwhile Italy is likely to remain the main catalyst for movement in the euro today, with significant losses expected if the EU moves forward with punitive measures against the Eurozone’s third largest economy.
Finally while US data releases remain thin on the ground today, an increasingly uncertain outlook in Europe will likely help to drive USD higher.
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)