The pound initially opened last week’s session on stable footing as GBP investors welcomed Scotland’s lifting of its remaining coronavirus restrictions.
Meanwhile, the pound is trading in a narrow range so far this morning, with GBP/EUR flat at €1.1811 and GBP/USD stable at $1.3862. GBP/CAD is rangebound at C$1.7354, while GBP/AUD and GBP/NZD hold steady at AU$1.8830 and NZ$1.9736 respectively.
Looking ahead, will a robust UK GDP reading help to propel GBP exchange rates higher today?
What’s been happening?The US dollar retreated during yesterday’s European trading session, in the wake of the latest US CPI print.
July’s CPI figures reported that headline US inflation held at 5.4%. While this beat forecasts it would dip to 5.3%, USD investors took the slowing of month-on-month price growth as a sign that US inflation may have peaked.
Further dampening demand for the ‘greenback’ were comments from the Federal Reserve’s Thomas Barkin, who suggested it could be a few more months before the Fed’s taper benchmark is struck.
This pullback in the US dollar helped to bolster the appeal of the euro, thanks to the strong negative correlation between the pairing.
Meanwhile, the pound remained largely confined to a narrow range on Wednesday, as the absence of any notable UK data releases left the currency without any strong directional bias.
What’s coming up?Kicking off today’s session was the publication of the UK’s latest quarterly GDP release, which may lend some support to the pound.
The preliminary estimate for the second quarter reported a sharp 4.8% rebound in UK economic growth as more of the UK economy reopened.
Also coming up this morning is the Eurozone’s latest industrial production print, which could push the euro lower amidst forecasts that factory output in the bloc will have contracted again in June.
Finally, this afternoon will see the release of last week’s US initial jobless claims. Will another drop in new claims in the first week of August help to buoy the US dollar later this afternoon?
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)