Pound Sterling exchange rate makes tentative gains

The pound began the slow road to recovery at the end of last week’s session, with its recent fall making it an attractive proposition for many traders.

This morning sees Sterling making some tentative gains against a couple of its peers, with GBP/USD climbing to $1.3575 and GBP/NZD jumping to NZ$1.9525. Meanwhile GBP/EUR is flat at €1.1358, while GBP/CAD and GBP/AUD are holding steady at C$1.7346 and AU$1.7968 respectively.

Looking ahead the US dollar could tumble if the Federal Reserve’s James Bullard continues to strike a cautious tone in a speech later this afternoon.

What’s been happening?

After plummeting in the wake of the Bank of England’s (BoE) rate decision on Thursday the pound looked to regain its footing on Friday as investors sought to profit from the currency’s recent lows.

The uptick in Sterling also followed a passionate defence of the BoE’s decision, by the bank’s deputy governor Ben Broadbent as he suggested a May rate hike was never promised and that it was necessary to leave rates on hold given the recent ‘soft patch’ in UK data.

While it initially ticked higher at the start of Friday the GBP/EUR exchange rate closed the day’s session virtually unchanged from its opening levels after markets appeared receptive to European Central Bank (ECB) President Mario Draghi’s call for a complete banking union.

At the same time the GBP/USD exchange rate was able to sustain its recovery at the end of last week as the US dollar came under fire following comments by St. Louis Reserve Bank President, James Bullard, in which he suggested interest rates may have already reached a ‘neutral’ and further hikes were unnecessary.

What’s coming up?

The pound may be in for a quiet session today as a lull in domestic data leaves very little to drive movement in the currency.

Instead Sterling may go into a holding pattern ahead of tomorrow’s labour figures.

Markets are anticipating UK wage growth will have begun to accelerate again at the end of the first quarter, with GBP investors hopeful that this will help fuel a recovery in the UK’s economic activity over the coming months.

The euro looks set for an equally quiet start to this week’s session, as an empty data calendar leaves markets to focus on the release of the Eurozone’s latest GDP estimate and inflation figures later in the week.

Meanwhile the US dollar may be prompted into action later this afternoon following another speech by the dovish Bullard, with the ‘Greenback’ possibly stumbling if the Fed policymakers continues to urge the bank to stay its hand on monetary tightening.