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Pressured Pound pushed lower

GBP - British Pound

On Wednesday cable extended its slide for the 3rd straight day as political concerns and lacklustre domestic data still takes a hold on the quid. Yesterday’s services PMI only just posted above the 50 mark posting 50.2, which was one of the worst performances over the past decade. This latest showing coupled with the poor manufacturing and construction released earlier in the week has all but ended the chance of a pound recovery this week. Carney's latest comments, which have been perceived as dovish, has kept sterling at bay as it now searches for any new positive Brexit news for direction, we could be waiting a while. The docket is light for the rest of the week so moves will be influenced by politics and events elsewhere.

Key Movers

The Greenback is entering a period of thin trading as July 4th celebrations begin sending the dollar on a long weekend, although we do still have the non farms number to deal with on Friday. Wednesday's calendar was busy where the latest ADP report showed that the US private-sector employers added 102K new jobs in June, up from the previous month's upwardly revised 41K but lower than 140K expected. Adding to this, the US ISM non-manufacturing PMI also missed consensus estimates and fell to 55.1 in June from 56.9 previous, though did little to provide any meaningful impetus. Speculation over Fed’s rate cuts in the near term have resurfaced earlier in the week in response to weaker-than-expected results from the US calendar so we could see some dollar selling as we close the week.

EUR/USD chugged along sideways for most of Wednesday's trade and even a positive reading from the services PMI couldn’t push the pair through the 1.13 handle. The lack of upside movement in the pair was partly down to escalating US-Iran geopolitical woes, looming US-China trade talks and the renewed dovish stance from the ECB appearing to re-surface, partly due to the recent appointment of ex IMF’s C.Lagarde to succeed Mario Draghi.

The Australian Dollar reached a two-month high overnight of 0.7046 as US equities spurred on markets globally. Trade Balance figures were impressive, recording a $5.75bn surplus during May and an all-time high. The main driver was a surge in commodity prices, in particular gold and natural gas as exports recorded a 4% growth to $41bn. As trade tensions continue to linger, it is a timely reminder that the Chinese economy is an important relationship to Australia with exports continuing to rise by 33% y/y into the world’s second largest economy.

Expected Ranges

GBP/USD: 1.2540 - 1.2600 ▼

GBP/EUR: 1.1110 - 1.1210 ▼

GBP/AUD: 1.7850 - 1.8050 ▼

GBP/NZD: 1.8710 - 1.8850 ▼

GBP/CAD: 1.6350 - 1.6550 ▼