From being one of the strongest to one of the weakest currencies in space of two days. That’s right, the euro is actually falling for once. The single currency is partly lower because of the drop in the euro/U.S. dollar (EUR/USD) currency pair exchange rate as the dollar firms up across the board thanks to short covering and positive surprise in U.S. data.
Short covering from oversold levels lifted the GBP/USD from 1.2775 to a high so far of almost 1.2930. The euro/British pound currency pair's strong upward trend paused as the cross drifted lower to around 0.9200 while the GBP/JPY made back more than half of it sharp falls from the day before.
Despite this being a quiet session so far, we have seen the pound fall below 1.28 against the U.S. dollar while the euro strengthened thanks to the Eurozone flash PMI data, which were mostly stronger than expected. The data helped to boost expectations about tighter monetary conditions in the single currency bloc.
Earlier today, the latest UK jobs report showed that the unemployment rate dropped to the lowest since 1975, which pushed the British pound higher against the greenback. Despite this improvement, currency bulls didn’t manage to hold gained levels, which resulted in a pullback. How low could the GBP/USD go in the coming days?
The British Pound is trying to steady its stance at 1.28, after stronger than expected UK wage growth figures spared it from further losses, following a heavy decline noted in the latest inflation figures that were released yesterday.
The pound, already out of favor ever since the Bank of England's last policy meeting a couple of weeks ago, fell further yesterday in response to softer-than-expected UK inflation figures. The BoE's willingness to keep monetary policy extremely accommodative was beginning to make sense again, especially as the issue of Brexit still hangs over the markets. Today, however, the ONS reported some solid jobs and wages data, which led to a relief rally in sterling.