The US dollar remained well supported on Friday, with the currency continuing to catch bids in light of the Federal Reserve’s recent hawkish shift.
Meanwhile, the pound is edging higher in early trade this morning, with GBP/EUR climbing to €1.1585 and GBP/USD firming at 1.3891. GBP/CAD is buoyed at C$1.7091, while GBP/AUD and GBP/NZD hold steady at AU$1.8019 and NZ$1.9413, respectively.
Coming up, will data showing another record expansion of the US service sector further bolster the US dollar this afternoon?
What’s been happening?The US dollar struck higher yesterday as a selloff on the equity markets spooked investors, prompting them to favour the safe-haven ‘Greenback’.
These gains were further reinforced by rising expectations for a relatively strong US economic rebound this year in the wake of upbeat US economic releases in recent weeks.
This uptick in the US dollar came at the detriment of the euro, with the negative correlation between the pairing dragging the single currency lower.
The pound opened yesterday’s session on strong footing, with Sterling sentiment soaring after the UK’s latest manufacturing PMI printed at a near record high in April.
However, the pound quickly fell back from its best levels, as jitters over the upcoming Scottish parliamentary election and an escalating Brexit row between the UK and France dented GBP exchange rates.
What’s coming up?Turning to today’s session, the spotlight looks to be on the latest ISM non-manufacturing PMI.
April’s figures could send the US dollar higher later this afternoon, as economists forecast last month’s figures will improve upon March’s record expansion in the service sector, further bolstering expectations for a swift US economic rebound this year.
In the meantime, the Eurozone’s own services PMI could lend some support to the euro this morning if they confirm the sector expanded last month.
Finally, we may see the pound hold in a narrow range today as GBP investors are likely to be reluctant to make any aggressive bets as they brace for tomorrow’s Bank of England (BoE) rate decision and Scottish election.
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)