Daily Currency Update

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UK and European PMIs impress

GBP - British Pound

For the most part Sterling regained much of its early loses through Monday trading, moving from a low of 1.2335 back above the 1.24 handle. Overnight Asia trading seemed to be shaping up to continue the same path, however, during an interview with Fox, around the US China Trade negotiations, trade adviser to President Trump, Pete Navarro, stated that Trump has decided to terminate the China trade deal as intelligence officials grow increasingly confident that the coronavirus pandemic originated in a Wuhan laboratory. When pressed he said definitively ‘It’s over’.

The comments saw risk trading take a hit with GBP/USD falling from above 1.25 to an overnight low of 1.2438. EUR/USD also saw falls from 1.1280 before finding support around the 1.1235 level.

Later in the interview Navarro denied the deal was over and his comments were taken out of context. As such, risk trades roared back. This news, along with this morning’s better than expected UK and Eurozone June PMI numbers, have helped both Sterling and the single currency recover all their loses.

First off was France and Germany, then the eurozone as a whole and the UK posted their indexes this morning. Every single one was above market expectations and has led to improved risk sentiment regarding the UK and European economies ability to recover following the Cornavirus pandemic. Hopefully this continues and we avoid a second wave but only time will tell.

Looking ahead to the rest of the day, attention will move across the pond to US PMI numbers along with the Richmond Red Manufacturing index and new home sales for May.

Key Movers

The Australian and Kiwi dollars benefited from broad based USD weakness overnight but soon gave up their gains following US trade advisor Navarros’ US / China trade comments, as detailed above. After hitting highs just above 0.6935, AUD/USD fell to lows under 0.6860 while NZD/USD hit lows of 0.6437. As with GBP and the EUR, both the antipodean currencies regained much of their loses and start today's trading pretty much unchanged.

Attention will now shift to US PMI, manufacturing and home sales numbers from the US plus the overnight interest rate statement from the reserve bank of New Zealand. While they are not expected to change interest rates from the present level of 0.25%, the statement will give a good indication of how the NZ central bank sees their economy recovering.

Expected Ranges

GBP/USD: 1.2385 - 1.2535 ▲

GBP/EUR: 1.0980 - 1.11 ▲

GBP/AUD: 1.79 - 1.81 ▲

GBP/NZD: 1.9150 - 1.93 ▲

GBP/CAD: 1.6785 - 1.6925 ▲