Sterling recovered from five-month low versus the common currency after April pay data. The British currency has been on the backfoot in recent weeks as investors sit on the sidelines.
The contest to succeed Theresa May as leader of the Conservative party and country heats up. Investors are concerned the next British prime minister could put the country on course for a no-deal Brexit. Eurosceptic Boris Johnson is bookmakers’ favourite to win the contest.
On Monday, worse than expected data showing the British economy shrank 0.4% in April added to the pound’s worries. However, sterling found some relief after wage growth in the three months to April came in at 3.1%. Employment growth slowed but the jobless rate held at its lowest since 1975, the official figures showed. Wage growth is outstripping inflation and the BoE has said it will need to raise interest rates to keep inflation close to its 2% target.
The pound recovered from five-month lows against the euro of 89.325 pence hit earlier in the session and rose 0.2%. Versus the dollar the British currency rose 0.2% to $1.2711 from around $1.2694 before the data.
START TRADINGForex – Sterling recovered from 5-month lows VS euro
Financial markets over the last year have been gripped by fears of escalating trade tensions between the world’s two largest economies. Broader market sentiment got a lift from the U.S.-Mexico trade and migration deal, sending U.S. government bond yields higher overnight.
The dollar steadied above a recent two-and-a-half-month low on Tuesday as investors focused on a Group of 20 summit. Later this month Beijing and Washington might make some progress on trade talks.
The yen eased on Tuesday as investors’ risk appetite ticked up after the United States shelved plans to impose tariffs on Mexico. Against the safe-haven yen, the dollar advanced nearly 0.2% to 108.625 yen, extending a similar gain during the previous session.
The Australian dollar was largely steady at $0.6961, recovering after dipping to a one-week low earlier in the session.
The euro was a touch firmer at $1.1318 though a survey showed investor morale in the euro zone deteriorated sharply in June, falling well short of expectations. The euro rallied nearly 1.5% last week after the ECB said rates would stay “at their present levels” until mid-2020 instead of hinting at rate cuts
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money