Pound (GBP) Exchange Rates Face Pressure as UK Jobs Report Reveals First Drop in Pay Since 2001
The Pound (GBP) ticked higher in early trade this week, with the weakness of some of its peers helping to bolster Sterling despite concerns over a looming unemployment crisis.
While today’s employment figures reported that unemployment held at 3.9% in June, GBP investors are concerned by the threat of huge jobs losses once the government’s furlough scheme expires in October.
However, of more immediate concern is the UK’s latest wage growth figures as they revealed that wages (excluding bonuses) declined by 0.2% in June.
This is the first contraction in regular pay since 2001 and is likely to negatively impact future consumer spending.
Euro to Pound Exchange Rate Rises on Jump in German Economic Sentiment to offer EUR Support
The Euro (EUR) found itself on the defensive on Monday as EUR investors are growing increasingly unnerved by Europe’s apparent coronavirus resurgence.
Spain and France are showing evidence that coronavirus cases are on the rise again and EUR investors are bracing for what could be the dreaded ‘second wave’.
Meanwhile, an unexpected jump in economic sentiment in Germany will likely buoy EUR investors. The latest ZEW economic surveys showed a significant jump in optimism, which in turn could offer some optimism in Euro exchange rates today.
US Dollar (USD) Fluctuates in Upbeat Trade
The US Dollar (USD) fluctuated during yesterday’s trading session as market sentiment improved despite concerns over renewed US-China tensions.
However, the latest JOLTs job opening figures helped limit the slide in USD exchange rates as available vacancies unexpectedly jumped to a three-month high in June.
Looking ahead, the impasse in Washington over the next round of US stimulus will likely be the main focus for USD investors today. The US Dollar could strengthen if there are any signs of movement towards a deal.
Canadian Dollar (CAD) Stable amid Rising Oil Prices
The Canadian Dollar (CAD) held steady on Monday as strengthening oil prices helped to bolster the appeal of the commodity-linked ‘Loonie’, preventing its stronger peers undermining CAD exchange rates.
Australian Dollar (AUD) Firms in Risk-On Trade
The Australian Dollar (AUD) struck higher overnight on Monday, with investors looking upon the risk-sensitive ‘Aussie’ favourably in light of a more upbeat market mood.
However, the National Australia Bank’s (NAB) business confidence figures tempered AUD gains. The NAB’s sentiment index plunged in August in response to domestic coronavirus concerns.
New Zealand Dollar (NZD) Buoyed Ahead of RBNZ
The New Zealand Dollar (NZD) also rallied in risk-on trade overnight on hopes the recent tensions between the US and China will not affect their trade deal signed back in January.
The ‘Kiwi’ may struggle to consolidate these gains, however, as the Reserve Bank of New Zealand (RBNZ) is expected to strike a dovish tone in its upcoming rate decision.