GBP

Yesterday sterling regained some of the losses experienced last week as markets continue to digest a list of ongoing issues.

Most notably, rising global inflation worries meant sterling, alongside other risk assets, was sold off heavily with investors preferring to hold safe-haven assets. To put it into perspective, by mid week the pound was the worst performing major currency, and compared to the position it was in some two weeks ago, a worrying sight for investors.

However, last Thursday’s UK GDP data helped give sterling direction into the weekend. The pound now awaits for its next bit of direction, but where this will come from remains to be seen.

The most notable current issue the pound is facing is the country wide panic buying of petrol. The government had to ask the army to assist delivering petrol to forecourts across the country. Despite this and according to a recent survey, a fifth of London petrol stations are still without fuel. Should this continue the pound will struggle to gain much ground against any major.

USD

While the pound has gained ground against the euro, it has struggled against the dollar. The demand for safe-haven assets in the past week has been prevalent. Should the global energy crisis continue, we don’t expect this to change for the foreseeable future.

Oil prices are now at three year highs. Yesterday, OPEC+ stated they will not be increasing their current production levels. All of the above result in a strong dollar.

A release that could shift demand however, is Friday’s Non-Farm payrolls release. The US economy is set to add 490k jobs compared to last month’s 235k. Any deviation below expectation or last month’s reading should weaken the dollar.

Key announcements

15:00 – USD – ISM manufacturing (59.9 from previous 61.7)