Pound slips despite upbeat PMIs and lockdown easing announcement
Philip McHugh June 24th 2020 - 2 minute read
The pound stumbled on Tuesday, despite the announcement that more lockdown restrictions are being eased next month.
Sterling remains mostly muted so far this morning, with GBP/EUR flat at €1.1055 and GBP/USD subdued at $1.2511. GBP/CAD and GBP/AUD are holding steady at C$1.6956 and AU$1.8037 respectively, while GBP/NZD has rallied to NZ$1.9347.
Looking ahead, the spotlight today looks to be on Germany’s latest business confidence figures. Will an improving outlook help to boost the euro this morning?
What’s been happening?
The pound was left on the back foot through yesterday’s European trading session. There was no clear catalyst for the sell-off and it came in spite of some positive developments.
Boris Johnson announced plans to reopen more of the UK economy next month, with pubs, restaurants, and hairdressers allowed to open for the first time in three months when the UK’s 2m distancing rule is eased on 4 July.
Some positive PMI figures, revealing the UK manufacturing sector returned to growth this month also failed to inspire any positive movement in Sterling on Tuesday.
However, it was a different story for the euro as the Eurozone’s stronger-than-expected PMI figures sent the euro higher on hopes the bloc is set to rebound in the third quarter.
The US dollar, meanwhile, was met by some selling pressure through yesterday’s session as markets expressed relief that the US-China trade deal agreed in January is still in place.
This followed a brief wobble in markets in early trade after comments from White House trade advisor Peter Navarro were allegedly taken out of context to suggest the deal had been scrapped due to Beijing’s handling of its coronavirus outbreak.
What’s coming up?
Turning to today’s session, the focus this morning will be on the latest Ifo business climate survey from Germany.
This is expected to show that the business outlook in the Eurozone’s largest economy continued to improve this month, which will potentially allow the euro to extend its recent gains.
In the UK, GBP investors will be looking out for more details on the government’s plans to ease its lockdown restrictions and whether businesses believe it will be viable to operate under the new distancing rules.
Finally, we may see the US dollar maintain its downward trajectory through today’s session so long as market sentiment continues to improve.