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The euro was rocked on Thursday as the European Central Bank (ECB) concluded its latest interest rate decision with a surprise 75bps rate hike

currency-newsThe euro was rocked on Thursday as the European Central Bank (ECB) concluded its latest interest rate decision with a surprise 75bps rate hike
The euro was rocked on Thursday as the European Central Bank (ECB) concluded its latest interest rate decision with a surprise 75bps rate hike.

Meanwhile, the pound is subdued at the start of today’s session, with GBP/EUR muted at €1.1738 and GBP/USD dipping to $1.1970. GBP/CAD has slipped to C$1.5414, while GBP/AUD and GBP/NZD hold steady at AU$1.7305 and NZ$1.9220, respectively.

Looking ahead, we could see some currency volatility this morning on the back of the latest UK and Eurozone PMI releases.


What’s been happening?

The euro initially firmed yesterday following the news that Russia would resume gas exports to Germany via the Nord Stream pipeline, albeit at a reduced capacity.

EUR exchange rates then extended this uptrend in response to the European Central Bank’s shock decision to raise interest rates by 50bps.

However, the euro then relinquished almost all of these gains after ECB Christine Lagarde struck a cautious tone in a subsequent press conference.

Meanwhile, the pound was placed on the back foot on Thursday, undermined by a souring market mood and ongoing political uncertainty in the UK.

At the same time, the US dollar traded in a narrow range yesterday as US initial jobless claims unexpectedly climbed to a new seven-month high.  


What’s coming up?

Kicking off today’s session was the publication of the UK’s latest retail sales figures. June’s figures have placed the pound on the defensive this morning after reporting another contraction of sales growth.

This dip in Sterling could be reinforced by the release of the UK’s latest PMI figures, which are expected to report a slowdown in private sector activity this month.

This will follow the release of the Eurozone’s own PMI figures. The bloc’s manufacturing and services sectors are both expected to have slowed this month, likely reversing some of the euro’s recent gains.

Finally, today’s US S&P PMI figures, while not as influential as the ISM releases, could act as a drag on the US dollar if they report US private sector growth weakened this month.
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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