Trade in the Pound was mixed yesterday, after data showed that UK inflation soared to a new 40-year high in July.
Meanwhile, the pound is trading in a narrow range this morning, with GBP/EUR stable at €1.1766 and GBP/USD holding steady at $1.3140. GBP/CAD is buoyed at C$1.6438, while GBP/AUD and GBP/NZD tick up to AU$1.7569 and NZ$1.8807, respectively.
Coming up, will another spike in the US PCE price index help to revive demand for the US dollar today?
What’s been happening?A clear USD selling bias remained in place through yesterday’s session as risk-on flows led investors to shun the safe-haven US dollar.
Also undermining the ‘greenback’ was the latest US GDP figures, with the finalised figures for the fourth quarter printing slight below expectations with a 6.9% expansion rather than the 7.1% surge in growth previously forecast.
The euro, meanwhile, continued to appreciate on Wednesday, bolstered by hotter-than-expected German inflation.
This helped to mitigate some of the fading optimism regarding Ukraine-Russia peace talks, as Russian forces continued to shell targets in Chernihiv despite its promise to scale down its military activity in the region.
At the same time, the increasingly risk-sensitive Pound was able to strengthen thanks to the bullish mood, with GBP investors largely shrugging off some dovish comments from Bank of England (BoE) policymaker Ben Broadbent.
What’s coming up?Turning to today’s session the spotlight is likely to be on the latest US PCE price index.
As the Federal Reserve’s preferred indicator for inflation another jump in February is likely to bolster expectations for the Federal Reserve’s next interest rate hike.
In the meantime, the Eurozone’s latest employment figures could provide a boost to the euro if unemployment in the bloc fell as expected last month.
This follows the release of Germany’s latest retail sales figures earlier this morning, which may place some pressure on EUR exchange rates after printing below expectations last month.
The UK also published its latest GDP figures at the start of today’s European session, with GBP investors pleasantly surprised by an upwards revision to growth in the last quarter of 2021.
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)