The pound tumbled against the majority of its peers on Monday as renewed concerns over Brexit eliminated the gains granted by the UK’s latest construction report.
Sterling appears to be broadly flat this morning, with GBP/EUR holding steady at €1.1392, GBP/USD stable at $1.3320, GBP/CAD muted at C$1.7222, while GBP/AUD and GBP/NZD are both holding steady at AU$1.7420 and NZ$1.8923 respectively.
Looking forward, the pound may attempt to rally this morning if the UK’s latest services PMI rises in line with expectations…
What’s been happening?
The pound initially found some support on Monday as a stronger-than-expected construction PMI provided some relief to the currency.
However the GBP exchange rate quickly fell back again as concerns over Brexit continued to dampen market outlook for the UK economy.
This drop in Sterling sentiment appeared to be mostly driven by fears the UK government is still yet to finalise its plans for Brexit, a worrying prospect as we near June’s EU summit.
The losses in GBP/EUR were further accelerated yesterday as signs of political stability in Italy came as a relief to euro investors.
While traders are still expressing some reservations regarding the spending and tax plans of the new coalition government, they appeared relieved that the new Economy Minister Giovanni Tria appears committed to remaining in the Eurozone.
Meanwhile the GBP/USD exchange rate initially strengthened on Monday as renewed global trade concerns driven by the White House’s protectionist policies pressured the US dollar.
These gains proved to be short-lived however as the pairing fell back again by the start of US trading thanks to rising Fed hike expectations.
What's coming up?
Looking ahead, movement in the pound today is likely to be driven by the release of the UK’s latest services PMI.
Economists forecast that activity in the services sector will have risen slightly in May, possibly helping to bolster the appeal of Sterling.
However any gains for the pound may prove to be relatively minor as the pace of growth is still predicted to have remained quite subdued.
Meanwhile the euro may tick higher this morning following the publication of the Eurozone’s retail sales figures, with a pickup in sales growth likely to lift EUR sentiment.
Finally the US will release its own services index later this afternoon, with the US dollar predicted to strengthen if ISM’s non-manufacturing PMI climbs in line with expectations.
We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.
Currencies Direct
One Canada Square
Canary Wharf
London
E14 5AA
T: +44 (0) 20 7847 9400
W: currenciesdirect.com
E: customer.s@currenciesdirect.com">customer.s@currenciesdirect.com
