The pound plummeted on Monday as some lacklustre domestic economic data weighed heavily on the UK currency.
Sterling appears to be largely muted this morning, with GBP/EUR flat at €1.1346, GBP/USD virtually unchanged at $1.3375, while GBP/CAD and GBP/AUD hold steady at C$1.7374 and AU$1.7558 respectively. Only GBP/NZD is currently showing any real signs of movement as it tumbles to NZ$1.8994.
Looking to today’s session, the pound may look to mount a recovery if UK wage growth is shown to have ticked higher at the start of the second quarter.
What’s been happening?
The pound got off to a poor start this week, with the currency being hit by heavy losses after the release of some disappointing economic data from the UK.
Yesterday’s data saw the UK’s trade deficit unexpectedly swell from -£3.22bn to -£5.28bn in April, falling significantly short of expectations that the deficit would narrow to -£2.5bn.
The accompanying industrial production figures further dented Sterling yesterday as the fall in factory output from 0.1% to -0.8% at the start of the second quarter was a major blow to GBP investors, especially when compared with forecasts of a 0.2% rise.
This drop in the pound also extended the losses in the GBP/EUR exchange rate, which came under pressure this morning as the euro was buoyed by comments from Italy’s new economy minister Giovanni Tria, in which he ruled out leaving the single currency.
Meanwhile the GBP/USD exchange rate was saved from any heavy losses at the start of this week’s session as a lack of impactful US data USD had investors remaining reluctant to alter their positions in the US dollar ahead of an expected rate hike from the Federal Reserve on Wednesday.
What's coming up?
Looking ahead, the pound may attempt to rally this morning as investors await the publication of the UK’s latest labour report
Economists forecast April’s labour figures which have seen no change in the UK’s jobless rate in April following a slowdown in employment growth.
However Sterling sentiment could still tick higher if any improvement is shown in wage growth as some analysts suspect.
Meanwhile the euro looks poised to tumble this morning following the release of Germany’s latest economic sentiment survey, with analysts predicting the economic outlook will have become even gloomier for the Eurozone’s latest economy.
Finally the US dollar may surge later this afternoon on the back of the latest US CPI figures, as economists forecast US inflation will have rocketed in May.
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