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Sterling Enjoys Positive End To The Week

4th June 2018 Market Update

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?? GBP – The pound strengthened on Friday as data showed UK Manufacturing growth gaining momentum. After languishing near six-month lows for most of the week, significant gains were seen versus the US dollar, with the largest daily movement seen for eight weeks. Sterling strengthened 0.7% versus the euro.

Investors are only pricing in a one-in-three chance of an interest rate rise at the next MPC meeting in August, which means that the currency will most likely be influenced by overseas factors and ongoing Brexit negotiations.

Today sees Construction PMI data released.

?? EUR – The single currency was negatively impacted on Friday with the news that EU lawmakers from the two potential coalition parties in Italy have backed a proposal to assist countries in quitting the euro. Consequently, the euro lost ground versus the pound and remains at significantly lower levels versus the US dollar than have been seen for some time.

There is no data due today.

?? USD – The dollar stands at its highest level in nearly seven months, as US interest rates shot higher in April and the currency is buoyed by positive economic data. This was evidenced on Friday, as the Non-Farm payroll figure impressed. The dollar index, which is key for gauging dollar confidence, has gained nearly six percent since April. On Friday, the greenback hit a ten-month high versus the euro and should the political situation in Italy worsen, we could well see an even stronger dollar going forward.

There is no data due today.

 

Key Announcements

?? GBP
09:30am: UK Construction PMI.

 

Summary:Sterling picked up on Friday following Manufacturing growth. It achieved it’s biggest daily gain versus the US dollar in eight weeks to close on a five-day high.

 

 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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