The pound initially opened last week’s session on stable footing as GBP investors welcomed Scotland’s lifting of its remaining coronavirus restrictions.
Meanwhile, trade in the pound is mixed so far this morning, with GBP/EUR subdued at €1.1733 and GBP/USD sliding to $1.3703. GBP/CAD is buoyed at C$1.7446, while GBP/AUD and GBP/NZD accelerate to AU$1.9091 and NZ$2.0038 respectively.
Looking ahead, will another drop in US initial jobless claims help to propel the US dollar higher later this afternoon?
What’s been happening?The US dollar traded with modest gains yesterday, after the release of the minutes from the Federal Open Market Committee’s (FOMC) latest policy meeting.
The minutes initially triggered the US dollar to weaken as they revealed that policymakers are not in a rush to begin tapering.
However, the fact that tapering talks have actually begun, appeared to be enough to quicky revive confidence in the US dollar.
The pound, meanwhile, traded sideways on Wednesday, in the wake of the UK’s latest consumer price index.
July’s figures reported that domestic inflation slowed much faster than expected, dropping from 2.5% to 2% and limiting the appeal of Sterling as it dampens expectations that the Bank of England (BoE) could start to taper its quantitative easing programme in the coming months.
The euro was also confined to a narrow range yesterday, following the publication of the Eurozone’s own CPI figures, which confirmed inflation in the bloc rose by 2.2% last month.
Whilst this is above the European Central Bank’s (ECB) target of 2%, the release is unlikely to push the bank to rethink its current dovish bias and so failed to offer much support to the single currency.
What’s coming up?Turning to today’s session, the only notable release on the data calendar is last week’s initial jobless claims from the US.
Economists are forecasting that new claims will have continued to fall in the second week of August, indicating a strengthening US labour market and potentially lending support to the US dollar following their release later this afternoon.
Meanwhile the pound may struggle for direction today amidst a lull in between UK data releases, with Sterling potentially vulnerable to losses if the market mood sours.
EUR data releases are also thin on the ground today, likely European coronavirus developments to act as a key catalyst of movement in the euro. Will the improving outlook on the continent be enough to buoyed EUR exchange rates today?
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)