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Pound exchange rate fluctuates as Brexit jitters offset BoE rate expectations

Pound exchange rate fluctuates as Brexit jitters offset BoE rate expectationsThe pound was met by volatility on Thursday, with a brief spike in the UK currency being wiped out by the end of the day as Brexit uncertainty began to cloud sentiment once again.
Sterling remains shaky this morning, with GBP/EUR muted at €1.1304, GBP/USD flat at $1.3231 and GBP/CAD unmoved at C$1.7375, while both GBP/AUD and GBP/NZD are edging lower, striking AU$1.7876 and NZ$1.9428 respectively.
Looking ahead, the US will publish its latest labour figures today, with the US dollar potentially strengthening if they print in line with expectations…

What’s been happening?
The pound started strongly on Thursday, with market sentiment lifted by some upbeat comments from Bank of England Governor Mark Carney.
Speaking at the Northern Powerhouse Summit in Newcastle, Cary said that recent UK data had given him ‘greater confidence’ that the slowdown in first quarter growth ‘was largely due to the weather’.
Carney was particularly upbeat regarding consumer spending, which he said had ‘bounced back strongly’.
The comments were well received by GBP investors, with expectations of an August rate hike rising in the wake of his speech.
However the pound quickly fell back by the afternoon, with sentiment retreating as Brexit anxiety began to rear its ugly head once more.
The GBP/EUR exchange rate tumbled yesterday, with the euro shrugging off the pound’s early advances thanks to a stronger-than-expected rebound in German industrial order figures.
The euro’s gains were then further extended by optimism that US trade rhetoric toward EU car producers had begun to soften.
Meanwhile, after initially rising, the GBP/USD exchange rate closed Thursday’s session close to where it began, with the US dollar strengthened by a surprise lift in US service sector activity in June, with the ISM non-manufacturing PMI jumping from 58.6 to 59.1.

What's coming up?
GBP investors are likely to turn their attention back to Brexit today as Theresa May meets with her cabinet in Chequers in order to thrash out the government’s Brexit whitepaper.
However with her cabinet still spilt on what sort of direction to take, this may be easier said than done, with the pound poised to tumble if they fail to reach an agreement.
At the same time the US dollar may see some notable swings on Friday with the publication of the latest labour figures, with a dip in the unemployment rate or a strong rise in payroll figures likely to turbo charge the USD exchange rate.
Meanwhile movement in the euro may be fairly limited today, with a lull in notable data leaving the single currency without anything to drive momentum.

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