A -2.6% monthly GDP contraction weighed heavily on the pound as worries over the UK’s economic outlook picked up again.
Meanwhile the pound remains mostly rangebound at the start of this week, with GBP/EUR muted at €1.1070 and GBP/USD stable at $1.2506. GBP/CAD is flat at C$1.6915, while GBP/AUD and GBP/NZD hold steady at AU$1.7930 and NZ$1.9063 respectively.
Looking ahead, the pound could push higher again today if the UK’s latest services PMI is revised higher.
What’s been happening?The pound was stuck in a narrow range at the end of last week’s session, amidst a quiet day of trade.
With the UK’s services PMI printing in line with expectations, the focus for GBP investors was largely on Brexit.
This resulted in Sterling struggling to find support as traders expressed their concern over a lack of progress in trade talks after the UK and EU warned ‘serious differences’ remained.
The euro was also directionless on Friday as thin trading volumes robbed the single currency of any momentum in spite of the Eurozone’s latest PMI figures being revised higher.
The US dollar, meanwhile, firmed on Friday, with another shocking rise in US coronavirus cases prompting investors to favour the safe-haven ‘Greenback’.
However, these gains were tempered by thin trading conditions due to the closure of US markets for the 4 July weekend.
What’s coming up?Turning to this week’s session, a slew of data should ensure some more volatility in exchange rates today.
This was kicked off by the publication of Germany’s latest factory order figures earlier this morning, with a rebound from record lows in May helping the euro strengthen in early trading.
The euro may look to build on these gains later this morning as the Eurozone’s latest retail sales figures are expected to report a strong rebound in sales growth over the same period.
For GBP investors, the focus today will be on the UK’s latest construction PMI, with a rise in construction activity last month potentially helping the pound to see off some likely Brexit headwinds.
Closing the day’s session will be the publication of the ISM non-manufacturing PMI. Will a strong showing by the US service sector in June help to boost the US dollar later this afternoon?
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)