Daily Currency Update

Get access to our expert daily market analyses and discover how your currency has been tracking with our exchange rate tools.

The race for PM begins

GBP - British Pound

On Teresa May’s final day as Prime Minister, the British currency jumped to a two-week high after weaker-than-expected U.S. jobs data weighed on the dollar. As has been the case in the last 18 months, the market is more greatly affected by major political headlines. Tory MP Candidates that wish to enter the race to replace May have until 17:00 BST to do so. Candidates must have the backing of eight other party members to officially enter the contest. Hardline Brexiteer Boris Johnson is currently the bookies favourite to succeed May, followed closely by Jeremy Hunt. Many predict that a Brexiteer Prime Minister is likely to cause the pound to slide to a two-year low. Sterling may drop as much as 2% to $1.24 if May’s successor imposes their hardline view on the situation. However, lawmakers are expected to initially block a no-deal Brexit and prevent a larger drop in the British currency. The coming week is filled with key data releases from the UK, including GDP m/m and Manufacturing Production m/m on Monday at 9.30 BST.

Key Movers

Trump’s decision to ‘indefinitely suspend’ U.S. tariffs on Mexico on Friday provided relief and positivity to a global market that is plagued by tension between economic superpowers. It shows that given the right incentive, the U.S. are keen to play ball and compromise. Despite the increased tariffs imposed by Trump, China’s exports unexpectedly returned to growth in May. This may be due to businesses front-loading shipments, to avoid further losses in case Trump imposes further tariffs. The Euro performed well last week despite the growing pressure on its largest economies to perform. A large part came from the ECB press conference, which was less dovish than expected. Draghi claimed the data about the economy is not as bad as the market believes and there is no probability of deflation in the Eurozone. The Euro is expected to be fairly muted due to the lack of major data released this week. Investor’s eyes turn towards Draghi’s talk on Wednesday and USD CPI and Core Retail Sales data later this week.

Expected Ranges

GBP/USD: 1.2670 - 1.2760 ▲

GBP/EUR: 1.1225 - 1.1345 ▲

GBP/AUD: 1.8205 - 1.8375 ▲

GBP/NZD: 1.9165 - 1.9290 ▲