The pound plummeted on Tuesday as the latest UK PMIs printed well below expectations.
Meanwhile, the pound is mostly rangebound this morning, with GBP/EUR stable at €1.1922 and GBP/USD muted at $1.3480. GBP/CAD and GBP/AUD are holding steady at C$1.7037 and AU$1.8879, respectively, while GBP/NZD climbs to NZ$2.0187.
Coming up, will another drop in Germany business confidence see the euro stumble in early trade today?
The US dollar got off to a roaring start this week, with the safe-haven currency catching bids as investors were spooked by tensions between the West and Russia over Ukraine.
What’s been happening?
These concerns sparked a wider selloff in equity markets which reinforced the uptick in USD exchange rates.
However the US dollar’s upside potential was capped by the release of the latest Markit US PMI releases, after they reported activity in the US service sector almost stalled this month.
This strengthening of the US dollar took its toll on the euro as a result of the pairing’s strong negative correlation, preventing the single currency from benefitting from the Eurozone’s stronger-than-expected Eurozone manufacturing PMI.
The pound, meanwhile, came under pressure following the publication of a weaker-than-expected UK services PMI, which revealed activity in the sector slumped to an 11-month low at the start of 2022.
Turning to today’s session, the publication of Germany’s latest IFO business climate index will be in focus for EUR investors this morning.
What’s coming up?
The release could see the euro face some headwinds, with economists forecasting January’s index will report another drop in business sentiment amidst record Covid infections in Germany.
The latest data from the Confederation of British Industry (CBI) may influence the pound today, with robust industrial order growth this month and a more positive outlook for the first quarter of 2022 potentially buoying Sterling.
Meanwhile, movement in the US dollar could prove limited today as USD investors are likely to hold off on making any aggressive bets ahead of the Federal Reserve’s highly anticipated policy meeting on Wednesday.
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)