Daily Currency Update
GBP - British PoundTuesday’s trade saw the value of the Pound depreciate further after a poor reading from the Construction PMI and dovish comments from the BOE governor, Mark Carney. Construction PMI had pencilled in an uptick from the previous month to 49.4, however 43.1 was the number that posted. This was the fastest drop in over 10 years with heightened political and economic concerns being the main reason. Sterling’s woes continued through the day after carney hit the wires. Moving away from his usual ‘upbeat’ stance he expressed concerns about global trade risks and Brexit uncertainty. Cable had been flirting with the 1.26 handle for most of the day and couldn’t remain above this level after Carney. We broke below and currently and have hit a low not seen since mid-June. The Pound now has to contend with the final round of PMI’s, services. Historically this is the only sector showing expansion so expect some further selling pressure if we see a number below 50.0.
Key Movers
GBP/EUR fell below the 1.12 handle on Monday and hasn’t been able to make any gains. Most of the attention for the Eurozone was on the succession votes for the top jobs at the European central bank. Christine Lagarde was nominated to succeed Mario Draghi as president of the ECB when his eight-year term ends on Oct. 31. Most feel Lagarde will share Draghi’s taste for aggressive and innovative monetary policy and financial markets are already pricing in an ECB rate cut by September. On the data front, German retail sales missed its forecast of 0.5% coming in at -0.6%. Across the Pond there was very little on the docket for the greenback. On the Sino-U.S. trade front, Washington and Beijing have agreed to restart trade talks, but U.S. trade advisor Peter Navarro said a potential trade deal “will take time.” Attention now shifts to Fridays non-farms number for further direction. Bullish traders for the Aussie shrugged off data overnight. Building approvals rose 0.7% month on month and the trade surplus widened to A$ 5,745 million in May from April’s A$ 4,871 million.
Expected Ranges
- GBP/USD: 1.2520 - 1.2600 ▼
- GBP/EUR: 1.11 - 1.12 ▼
- GBP/AUD: 1.7920 - 1.8050 ▼
- GBP/NZD: 1.8750 - 1.8910 ▼
- GBP/CAD: 1.6380 - 1.6550 ▼