The US dollar fell sharply on Monday as risk-on trade and falling US Treasury yields weighed heavily on the safe-haven currency.
Although the unemployment rate only picked up from 4.9% to 5% in November, this still points towards a weakening of the UK labour market.
However, the accompanying wage growth figures gave GBP investors some cause for optimism as earnings unexpectedly indicated 3.6% growth in November, instead of the 2.9% forecast and up from 2.8% the previous month.
The mood towards the pound looks set to remain relatively muted as markets brace for the outcome of the latest Bank of England (BoE) policy meeting.
While no change in monetary policy is expected from Thursday’s announcement, this could still prompt volatility for GBP exchange rates.
If policymakers express a greater sense of optimism over the economic outlook, the pound may find a rallying point in the wake of the meeting.
However, confirmation of the sharp downturn seen in January’s services PMI could limit the potential for any GBP exchange rate gains in the days ahead.
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)