IFX Market Report: Wednesday 24th June 2020

The pound spent yesterday reacting to its peers in opposite directions, at one point hitting a 3-month low versus the euro, but ending the day 0.3% up against the dollar.

UK services and manufacturing PMI data was better than expected on Tuesday, leaping to 47.6 in June from 30.0 in May. This was a record rise that exceeded forecasts, but it had little impact on the pound. There have been distinct signs that the pound has been performing as a risk-on risk-off currency recently.

A lack of economic releases today will likely keep sterling around current trading levels.

GBPUSD opened at 1.2485, closing at the daily high of 1.2522

GBPEUR opened at 1.1057, falling to a low of 1.1021 before closing at 1.1065

The US dollar softened yesterday after Washington backtracked on the previous day’s comments that the trade deal with China was over. President Trump confirmed on social media that the deal was fully intact.

The greenback is also under pressure from improving risk appetite, in the wake of the positive data from Europe yesterday and the ongoing easing of global lockdown measures.

Data yesterday showed that US business activity contracted for a fifth straight month in June, while sales of new one-family homes increased more than expected in May.

Yesterday finally saw some euro news after a period of relative quiet, with the single currency being buoyed by French business activity rebounding more than expected in June, returning to growth after a quarter of record downturn.

The euro was also bolstered by data showing downturn in the zone as a whole easing again this month. The PMI figure, seen as a good gauge of economic health, recovered to 47.5 and moved closer to the 50 mark that separates growth from contraction.

This morning’s positive German business climate data has further reinforced euro value in early trading today.

EURUSD opened at 1.1291, climbing to 1.1346 before closing at 1.1317

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