Following a disastrous Wednesday for the pound, which saw the currency hit a 14-month low against the dollar, GBP began to rally as market turmoil eased. The dollar continues to lead on both sterling and the euro.
The deterioration of the pound followed Wednesday’s news that 10-year borrowing rates had hit the highest price since the 2008 financial crash. The increased costs threatened to force Chancellor Rachel Reeves into either increased taxes, cuts to public spending or finding a way to break her own government borrowing rules. However, yesterday’s fresh commitment from the UK Treasury to its fiscal rules and confirmation that the instability didn’t call for a government intervention eased the markets.
The pound may face fresh losses if US payroll and unemployment figures published later today are stronger than predicted. The unemployment rate was forecast to remain steady at 4.2%, but Tuesday saw the US reveal job openings had increased to 8.1m, exceeding initial expectations of 7.7m, so today’s data may upset predictions.
While the euro gained against the pound on Wednesday, weak retail sales data for the eurozone countries saw sterling regain lost ground over the course of Thursday. Forecast to increase by 0.4%, eurozone retail sales increased by just 0.1%.
With no major data releases for the UK or eurozone scheduled for today, GBP and EUR are at the mercy of the US Non Farm Payroll and unemployment rate releases due to be published this afternoon.
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