The pound resumed its slide lower on Tuesday, with the currency drifting on Brexit uncertainty and rumours that Bank of England Governor Mark Carney has decided to stay in his position for an extra year.
This morning, GBP/EUR is trading at €1.1018, GBP/CAD is holding at C$1.6634 and GBP/USD has advanced to $1.2872. Meanwhile, GBP/AUD and GBP/NZD are both up this morning and trading in the region of AU$1.7612 and NZ$1.9207 respectively.
Today’s session is expected to be a quiet one, with the main market-moving data release being the US Q2 Gross Domestic Product release as well as spending figures in the form of Core Personal Consumption Expenditures. Both figures are expected to impress, so we could see some upside pressure on USD/GBP.
What’s been happening?
Yesterday saw the pound befitting from global trade uncertainty as US President Donald Trump outlined plans for a US-Mexico trade deal that could replace NAFTA.
Investors, sensing something of a reversal in Trump’s usually protectionist rhetoric, dumped the dollar and piled into riskier trade-correlated currencies.
But with political instability limiting demand for the Australian dollar, and Canada seemingly being left out in the cold in terms of North American trade, Sterling was left to pick up some of the slack.
Further putting a floor under the pound, and preventing it from drifting lower, were rumours that Bank of England Governor Mark Carney was considering staying on in his role until 2020, rather than leaving it in 2019.
With Mr Carney being seen as a ‘steady hand’, this somewhat alleviated investor fears over a possible ‘no-deal’ Brexit and any resultant chaos in the transition period.
What's coming up?
The rest of the week is expected to remain quiet, with a dearth of notable UK ecostats due for release. The vacuum is likely to be filled by political developments, with Brexit concerns likely to continue driving pound movement.
The euro also faces a similar lull in data today, possibly causing EUR investors to look towards the second half of the week when Germany’s latest inflation figures will be published.
Finally the US dollar may see some movement this afternoon when the latest GDP and consumption figures are released, with economists currently forecasting steady growth.
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