Daily Currency Update

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Sterling and Euro higher versus USD as risk sentiment improves

GBP - British Pound

Sterling enjoyed modest gains through yesterday’s trading as improved global risk appetite and better than expected UK manufacturing and services PMI numbers boosted the pound.

Following US trade adviser Peter Navarro's comments, on Monday, that a US / China trade deal was over and his subsequent retraction, President Trump and White House officials were out in force overnight, talking up markets and giving assurances that a trade deal is still very much on. This combined with rumours of a fresh $1 trillion-dollar US stimulus package saw risk appetite improve and lead to increased demand for both sterling and the euro.

GBP was also supported by UK Prime Minister Johnson's announcement that social distancing measures are to be relaxed further plus pubs, cinemas, galleries and libraries will be allowed to reopen on 4th July. The welcomed news saw GBP/USD extend its earlier gains, moving above the 1.25 handle and hitting an intraday high of 1.2537.

Looking ahead to today, with no data releases due from the UK, attention will turn towards tomorrows US GDP and jobless claims numbers.

Key Movers

Although we eventually finished the session with positive risk sentiment, Tuesday was a wild ride for risk assets. Investors shed risk assets during Asian trade when headlines surfaced that white house trade advisor, Navarro, informed news outlets that Trump had made the decision to terminate the China trade deal. This saw risky currencies like the AUD and NZD sold off aggressively and US equity futures much lower. Having since back tracked from his comments and after a raft of better than expected flash PMI’s out of Europe, risk assets recovered to finish the day in positive territory.

Positive flash PMI’s out of the Eurozone aided a jump in the Euro, with EUR/USD breaking above 1.1310 to touch an intraday high of 1.1348, its highest level since June 16. Lastly, looking at the Canadian dollar, USD/CAD saw some fresh selling pressure forcing the pair below the key 1.3500 psychological level.

As mentioned above, data is relatively thin on the ground through today's sessions. Traders will therefore focus their attention on tomorrow's US GDP and jobless claims figures.

Expected Ranges

GBP/USD: 1.2450 - 1.2565 ▲

GBP/EUR: 1.10 - 1.1135 ▲

GBP/AUD: 1.80 - 1.82 ▲

GBP/NZD: 1.9375 - 1.9525 ▲

GBP/CAD: 1.69 - 1.7050 ▲