Pound fluctuates following no confidence vote
Pound fluctuates following no confidence vote
The pound got off to a strong start this week, following the news that UK Prime Minister Boris Johnson would face a vote of no confidence.
Sterling is back on the defensive this morning, with GBP/EUR dipping to €1.1673 and GBP/USD retreating to $1.2475. GBP/CAD has ticked down to C$1.5722 while GBP/AUD slides to AU$1.7358. GBP/NZD holds steady at NZ$1.9344.
Looking ahead, will underwhelming factory order figures from Germany leave the euro on the back foot today?
What’s been happening?
The pound rallied through yesterday’s European trading session after it was confirmed a vote of no confidence in Boris Johnson had been triggered.
Sterling strengthened as GBP investors were confident that Johnson would win the vote. Protecting him from another vote for a year and helping to quell the recent political uncertainty which has dragged on the pound.
This gave way to some selling overnight after Johnson’s victory proved less decisive than expected, ensuring that questions over his future will continue.
The US dollar trended lower on Monday as demand for the safe-haven currency was dented by risk-on flows, while a dip in US Treasury yields also weighed on USD exchange rates.
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Meanwhile, the euro traded sideways at the start of this week as a result of thin trading conditions due to the closure of most European markets for the long weekend.
What's coming up?
Kicking off today’s session was the publication of Germany’s latest factory order release.
This could see the euro struggle today after April’s lacklustre reading revealed order growth contracted for the third consecutive month.
The pound, meanwhile, is on the back foot this morning as Johnson’s position as PM appears more tenuous than before.
Sterling sentiment may be dampened further by the finalised release of the UK’s services PMI, which looks set to confirm an alarming drop in activity in the services sector last month.
Meanwhile, the US dollar is likely to remain sensitive to market sentiment today. Will a more cautious mood allow the US dollar to strengthen?
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Call Mark Bonard 07912 268 357 email : mark.b@currenciesdirect.com