GBP/USD
Yesterday, the rate managed to make a surprising yet swift recovery following the damage that was dealt to the Pound after Boris Johnson’s narrow escape in the recent confidence vote. The rate clawed back the bulk of the losses that were seen at the start of the day but with today’s market open the currency pair has already fallen into a decline. This likely comes as the Pound is still having to deal with both political and economic concerns. Although Boris was victorious in the confidence vote yesterday, it highlighted the current issues in Parliament with calls for the PM to resign still at an all-time high. On top of this, recessionary fears coupled with double digit inflation are still a very likely scenario at the end of this year, weighing on the Pound. As for the Dollar, many investors are anticipating the vitally important inflationary data due on Friday from the States. This will help indicate what course of action their Fed will take in order to tackle inflation, figures that come in above consensus will likely support the Dollar. For trading today, both the Pound and Dollar do not have much to go on regarding data, meaning that the rate will predominantly focus on overall market sentiment.
GBP/EUR
So far into trading today the Sterling-Euro rate is clearly facing some intense downwards pressure, with the currency pair falling quite sharply. This is mainly down to the Pound still trying to shrug off the concern for PM Boris Johnson’s future following his recent no confidence vote. This may soon be overlooked however as markets will likely focus back onto the Bank of England and their stance regarding interest rate hikes. Looking at the Euro, it is holding up quite well as it finds support in the prospect of a hawkish European Central Bank meeting tomorrow. With markets still divided about the approach the ECB are expected to take, any surprise rate hikes by the bank will likely reward the Euro heavily. As it currently stands, markets have effectively priced in the expectation of a 0.25% rate hike on 21st July. As for trading today the Pound will have little to chew on, with no important data releases expected. The Euro, on the other hand, could find benefit in an important data release regarding GDP Growth rate expected shortly.
Morning Update published by Frank Brightman (08/06/2022)