The pound firmed during Thursday’s session, with the currency climbing amid a pause in the usual Brexit-related to and fro.
Sterling appears content with consolidating these gains this morning with GBP/EUR muted at €1.1113, GBP/USD steady at $1.2938 and GBP/CAD trading narrowly at C$1.7003, while GBP/AUD and GBP/NZD advance to AU$1.8086 and NZ$1.9673 respectively.
Looking ahead, the main focus for investors today will be the release of the latest US payroll figures, with the US dollar expected to surge if employment numbers rise in line with expectations.
What’s been happening?
Sterling edged higher yesterday, advancing against many of the other majors as the currency was lifted by lingering Brexit optimism and a lull in other developments of note.
This optimism was derived from a Bloomberg report on Wednesday in which it was suggested that both the UK and German governments might be willing to accept a less detailed Brexit agreement in order to prevent Britain leaving the EU without any form of deal in place.
While the report failed to cite its sources – something that caused Sterling to relinquish many of its immediate gains following the release of the report on Wednesday – in the absence of any other major developments, markets appeared content to allow GBP to drift higher.
Aiding the rise in the GBP/EUR exchange rate was the release of Germany’s latest factory order figures.
The figures revealed another surprise contraction in order growth in July, with the data weighing on the euro amid suggestions that the Eurozone’s largest economy was starting the feel the bite of rising trade war fears
Meanwhile the GBP/USD exchange rate was propped up by the latest US ADP employment figures which revealed US private sector employment growth slowed to 163,000 last month, compared to the 217,000 Americans entering the workforce in July.
What's coming up?
Some high profile data will see the US dollar take centre stage today as markets brace for the release of the latest US payroll figures.
Economists are forecasting that US payroll numbers will have swollen by an additional 191,000 in August, potentially prompting a fall in domestic unemployment and fueling further gains in the US dollar.
Meanwhile in the absence of any notable data, movement in the pound is likely to continue to be driven by Brexit sentiment, with Sterling likely to fall back if headlines begin to turn negative once again.
Finally the euro may find some support this morning with the publication of the Eurozone’s latest GDP estimate. Economists currently forecast that today’s reading will confirm the bloc expanded by a robust 0.4% in the second quarter.
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