The pound fell back against the majority of its peers during yesterday’s session, with the currency being knocked by comments from President Trump.
Sterling remains on the defensive this morning, with GBP/USD falling to $1.3135 and GBP/CAD sinking to C$1.7309, while GBP/EUR is muted at €1.1289 and both GBP/AUD and GBP/NZD are holding steady at AU$1.7774 and NZ$1.9474 respectively.
Looking forward, the only notable data release today is set to be the latest US consumer confidence figures, with a possible dip in household sentiment potentially dragging on the US dollar…
What’s been happening?
The pound made little headway throughout most of Thursday’s trading session as the publication of the UK government’s long-awaited Brexit white paper revealed the deep cracks within the Conservative Party.
While the paper helped to provide some much-need clarity on Brexit, GBP investors remained nervous as a sizeable portion of the Tory party appeared to be up in arms yesterday as they digested Theresa May’s proposals for the UK’s future relationship with the EU.
However, this was made significantly worse following comments from US President Donald Trump, with the pound sinking in the evening as he suggested May’s plans could prevent a UK-US trade deal.
The GBP/EUR exchange rate was able to drift slightly higher on Thursday, with the mixed reaction to the Brexit white paper being offset by the release of the minutes from the European Central Bank’s (ECB) June policy meeting.
Euro sentiment slid yesterday afternoon as the minutes appeared to conflict with recent reports of the ECB being split on the timeline of when to start raising interest rates next, with policymakers shown to have unanimously supported the pledge to leave rates on hold well into 2019.
At the same time, the GBP/USD exchange rate showed limited movement throughout yesterday’s session, with an uptick in the latest US CPI figures failing to push the US dollar higher.
Reports suggested that while inflation struck a new six-year high in June, some USD investors had hoped for a slightly stronger showing, leaving them disappointed as inflation only ticked up from 2.8% to 2.9%.
What's coming up?
It’s looking like a quiet end to the week in terms of UK data today, likely leaving markets to focus on the fallout from Trump’s comments, with the pound likely to remain on the back foot should Trump’s remarks diminish support for May’s Brexit blueprint.
Meanwhile the euro looks to be in the same boat as Sterling today, with a lull in data leaving EUR investors to possibly focus on external influences.
Fortunately the session won’t be completely devoid of economic data, with the US scheduled to publish its latest consumer confidence figures later this afternoon, with a possible dip in household sentiment this month likely to pressure the US dollar.
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