Sterling remains volatile despite lack of data
Tuesday 5 July, 2022
Daily Currency UpdateThere was no UK economic data of note yesterday, which meant the pound took guidance on news elsewhere. GBP/USD peaked at US$1.2160 early Monday afternoon with the US also seeing no data releases as 4th July celebrations saw a US bank holiday. The currency pair has gradually slipped lower since this peak as market participants' eyes now turn to the US reopening today and as we anticipate data from the UK this morning. The UK financial stability report will be followed by Bank of England Governor Baily holding a press conference to discuss the results. GBP/EUR saw a very narrow range of trading yesterday, with movement seen within 50 pips just above €1.1600. This narrow range has been broken this morning with the pound now touching closer to €1.1700. This is likely down to a positive final services PMI release from the UK which showing service providers saw a solid increase in business activity during June.
Key MoversIn Asia overnight we saw a number of key releases. Healthy economic data out of Asia highlighted China's June services activity expanded at the fastest in almost a year and Japan's service sector activity grew at the fastest rate in over eight years. Elsewhere, central bank action remains a dominant influence this week, with the Reserve Bank of Australia lifting its cash rate by 50 basis points to 1.35%. This marks 125 bps of hikes since May and the fastest series of moves since 1994. The news was no surprise to market participants, but the neutral tone of the Reserve Bank of Australia did with them stating that future rate increases will depend on data. AUD/USD dropped on the news and GBP/AUD gained ground.
- GBP/USD: 1.2000 - 1.2130 ▼
- GBP/EUR: 1.1600 - 1.1740 ▲
- GBP/AUD: 1.7610 - 1.7820 ▲
- EUR/USD: 1.0280 - 1.0400 ▼