The pound initially opened last week’s session on stable footing as GBP investors welcomed Scotland’s lifting of its remaining coronavirus restrictions.
Sterling appears to be trading robustly so far this morning, with GBP/EUR buoyed at €1.1280, GBP/USD stable at $1.2714 and GBP/CAD flat at C$1.6973, while GBP/AUD and GBP/NZD hold steady at AU$1.8222 and NZ$1.9191 respectively.
Coming up today is the release of the latest US payroll figures, which could extend the US dollar’s latest losses if employment slumped last month as some analysts suspect.
What’s been happening?
The pound found itself rangebound yesterday, with the UK currency struggling to find support in the face of growing political uncertainty.
This was not helped by suggestions from former Brexit secretary Dominic Raab that he would be willing to close Parliament if he became PM in order to force through a no-deal Brexit.
Driving movement in the GBP/EUR exchange rate on Thursday was the ECB’s latest policy decision, which led to mixed trade in the euro as the bank’s upwardly revised inflation forecast was undermined by the extension of a pledge to keep interest rates on hold until at least the second half of 2020.
Meanwhile, the GBP/USD exchange rate ticked higher yesterday as demand for the US dollar continued to be curbed by rising speculation that the Federal Reserve will be forced to cut interest rates in the coming months.
What’s coming up?
In the spotlight today will likely be the latest US non-farm payroll report, with USD investors wary of a potential slump after the ADP figures released earlier this week suggested employment growth fell to a decade-low in May.
Should payrolls suffer a dramatic drop then we are likely to see the US dollar move notably lower as it would further fuel speculation that the Fed will move to lower interest rates this year.
In the meantime, the euro is likely to face some pressure today following the release German data this morning which revealed industrial production in the Eurozone’s largest economy shrank faster than expected in April.
Finally, expect to see the pound remain frozen by political uncertainty today with the Tory leadership race officially getting underway as Theresa May steps down as leader.
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