So far into trading today the Sterling-Dollar pair has continued to edge lower, following in the footsteps of yesterday’s losses. In doing so, the rate finds itself on the cusp of exceeding the recent multi-year lows, should this current decline continue throughout the day. This recent downwards pressure on the Pound has been exerted by a number of reasons, most notably being the current deterioration in sentiment for both the UK economy and Government. To go into more detail, there is growing pessimism over PM Boris Johnson’s current political position as the Conservatives face the by-polls in a range of locations today. Should the results of these not be favourable for the Conservatives, there is concern over the potential backlash that Boris may be met with. Additionally, the Bank of England’s recent dovish approach to rate hikes is weighing on the Pound as analysts say the hikes are not enough to curb inflation. As for the Dollar, it is benefitting from the hawkish outlook for their Federal Reserve. The bank has shown its readiness for additional rate hikes down the line in a bid to tackle inflation. This has provided a plump level of support for the Greenback as investors perceive this as good news. For trading today, the rate will be influenced by both market sentiment and crucial PMI’s that are expected from the UK today, potentially increasing the downside risk for the Pound as investors will pay very close attention to the figures.
The Sterling-Euro rate has slipped into yet another decline so far into trading today, now making for its 6th consecutive day of downwards movement. This comes as the Pound has faced intense headwinds lately as investors continue to sell-off the Pound, making it difficult for the currency to climb. Acting on the rate today will be the by-polls held in parts of the UK, potentially creating more downside risk of the Pound should results bring on more political issues. However, the bulk of the market’s focus will be placed on both the PMIs released from the UK and Eurozone. These will show the current performance of the manufacturing sector, having taken a survey from 600 industrial companies. Should these figures highlight any concern for either economy, it is expected that the respective currencies will take a hefty blow. On top of this, markets will also wait for any additional comments from the Bank of England or European Central Bank regarding future interest rate hikes.
Morning Update published by Frank Brightman (23/06/2022)