The pound has found some minor support this morning from better than expected industrial and manufacturing data. The gains are coming after the pound set fresh three-decade lows and tumbled over 2.5% against the dollar in the last two days. Along with sterling, stocks markets are also higher this morning and oil is advancing. Despite the positive uptick, analysts are warning that GBP weakness isn’t over yet. Sterling is still heavily dependent on investor sentiment, and recent problems with real estate funds in the UK and political indecision over Brexit timelines aren’t likely to help the currency.
In contrast with the pound, the euro has started off the morning paring its gains from yesterday against the dollar as data released early today shows German Industrial Production fell compared to the previous month. The release of ECB Monetary Policy Meeting Accounts this morning has failed to lift give a sustained lift to the euro. Meanwhile, the Japanese yen has strengthened for the third day, showing that markets continue to prefer the safest assets.
As we inch closer to tomorrow’s US Nonfarm Payroll data, which tanked expectations of a Federal Reserve rate hike when it was last released in early June, the dollar is trading flat against a basket of major currencies for the second day. Fed minutes released yesterday, reflecting a pre-Brexit referendum outlook, were dovish and did little to bolster hopes for a hike. Analysts will be looking to the payroll figures tomorrow morning for strong evidence that the US economy is resilient despite global risks. Even then, dollar upside could be modest as markets continue to price out a near-term rate hike. On the other hand, disappointing data tomorrow could send the dollar lower.
EURUSD: Euro pares gains after the release of disappointing industrial production data.
GBPUSD: Sterling ticks upward as PM race tightens to two Conservative candidates.
AUDUSD: Aussie dollar trading flat against USD after yesterday’s surge.
USDCAD: Canadian loonie continues upward trend for the second day as oil prices strengthen.