Pound (GBP) Wavers as Post-Resignation Rally Fizzles Out
The Pound (GBP) experienced some volatility on Friday, slipping against its stronger peers, as the relief among investors following Boris Johnson’s resignation began petering out.
While a fairly upbeat mood in European markets lent the risk-sensitive Pound some support, traders remain seriously concerned about the future of the UK economy. New jobs data and energy bill forecasts signalled that there is more pain to come.
Today, the 1922 Committee executive elections are in focus for GBP investors. A new executive could change the Conservative Party rules to allow for a second no confidence vote in Boris Johnson. As a result, we may see some volatility.
Euro (EUR) Softens as Recession Worries Linger
The Euro (EUR) fell sharply at the start of Friday’s session, suffering from its negative correlation to the US Dollar (USD), which jumped to a fresh 20-year high.
Some soothing comments from European Central Bank (ECB) policymaker Ignazio Visco helped EUR recover some losses, alongside a pullback in USD. However, the single currency remained down on the day as recession fears remain.
In the absence of any notable EUR data, we may see ongoing fears over European energy security drive movement in the Euro today, potentially limiting the upside potential of the single currency.
US Dollar (USD) Slips as Market Mood Improves
The US Dollar (USD) initially ticked higher on Friday as expectations of ongoing aggressive rate rises from the Federal Reserve boosted the American currency.
However, the safe-haven ‘Greenback’ softened as the market mood improved. Stronger-than-expected US jobs data failed to lift USD, instead adding to an increasing appetite for risk.
Risk sentiment could drive the US Dollar through today’s session. Later on, a speech from the Fed’s John William’s could impact USD exchange rates. Will he strike a hawkish tone, thereby boosting the ‘Greenback’?
Canadian Dollar (CAD) Edges Higher on Positive Jobs Data
The Canadian Dollar (CAD) found modest success against some of its weaker peers at the end of last week. An unexpected drop in the Canadian unemployment rate and a slight pickup in crude prices supported the oil-linked ‘Loonie’.
With no Canadian data due out today, movements in the commodities market may continue to affect CAD.
Australian Dollar (AUD) Slips in Risk-On Trade
The Australian Dollar (AUD) ticked lower overnight, with the appeal of the risk-sensitive currency being suppressed by a cautious market mood.
New Zealand Dollar (NZD) Muted amid Downbeat mood
The New Zealand Dollar (NZD) also trended lower at the start of this week’s trading session as strong USD demand sapped market risk appetite.