The euro roared higher during yesterday’s session as markets cheered the EU’s proposals for a €750bn coronavirus recovery fund.
The pound was mostly subdued at the start of this week’s session, except against the US dollar which fluctuated as China retaliated against last week’s US tariff hikes.
Sterling appears to be on the defensive so far today, with GBP/EUR sliding to €1.1507, GBP/USD dipping to $1.2939 and GBP/CAD softening to C$1.7418, while GBP/AUD and GBP/NZD both weaken, dropping to AU$1.8601 and NZ$1.9650 respectively.
Coming up today we have the UK’s latest employment report, which could dent the pound if wage growth slowed in March as forecast.
What’s been happening?
The pound remained broadly flat at the start of this week’s session, with the UK currency continuing to face pressure over the lack of progress in the cross-party Brexit talks.
This was not helped by comments from shadow Brexit secretary Sir Keir Starmer who indicated that Labour could walk away from the talks this week if Theresa May remained unwilling to budge on a number of her so-called red lines.
This left the GBP/EUR exchange rate steady throughout yesterday’s session, with the euro also struggling to find momentum as analysts began to warn of the potential risks the upcoming EU elections may pose to the Eurozone, amidst signs of a swell in support for Eurosceptic parties.
Meanwhile, the GBP/USD exchange rate showed some volatility on Monday, briefly climbing in the afternoon as China responded to the decision by the US to hike tariffs on Chinese products on Friday.
What’s coming up?
Looking ahead to today’s session, the spotlight is likely to be on the publication of the UK’s latest labour report.
With the unemployment rate expected to have remained at a near-45 year low of 3.9% in March, the focus is likely to be on the accompanying earnings figures, with the pound potentially losing ground if wage growth slowed at the end of the first quarter as forecast.
At the same time, driving EUR exchange rates today will be the release of the Eurozone’s ZEW economic sentiment index, with the euro potentially appreciating this morning if sentiment remained positive.
Meanwhile, any movement in the US dollar today is likely to continue to come courtesy of the heightened trade tensions between the US and China, with USD exchange rates potentially strengthening if it leads to further risk aversion in markets.
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)