Pound Sinks on Pace of UK Hiring, Euro Gains as Greece Defers IMF Payment and US Dollar Holds Steady ahead of Jobs Data

Published: 5 Jun at 9 AM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Greece,

Pound Sterling (GBP)
After the Bank of England (BoE) opted to hold the cash rate, the Pound advanced as traders felt inaction was the best move at this juncture; particularly given recent poor results from manufacturing and services data. Friday has seen the Pound soften, however, thanks to a report from KPMG and the Recruitment and Employment Confederation (REC) which stated that the pace of hiring permanent staff slowed in May.
KPMG partner Bernard Brown said: ‘The UK job market saw a slight slowdown in May, as those on boards took time to digest the election result and work out the ramifications for their business. The public sector continues to suffer, with pay growth rising by just 0.2% in the last reported quarter.’

Euro (EUR)
In a surprise move by the Hellenic nation, Athens opted to defer the €300 million due to the International Monetary Fund (IMF), choosing instead to bundle all payments due this month to the end of June. This has caused the Euro to strengthen as the weight of uncertainty won’t be felt throughout the month. This also gives the Eurogroup a little more time to find a resolution to the situation that can please both Greece and its creditors.
With less focus on Greece, European economic data is likely to be more impactful. The Eurozone Gross Domestic Product will likely cause significant Euro volatility.

US Dollar (USD)
In response to positive labour market data on Thursday, the US Dollar edged higher versus its major peers. The appreciation was somewhat sluggish, however, after the IMF urged the Federal Reserve to delay a benchmark rate increase until 2016.
Friday has seen the US asset holding relatively steady versus most of its competitors as traders await US Non-Farm Payrolls and Unemployment Rate reports. Good results from these publications are likely to cause futures traders to bring forward bets of a Fed rate hike despite IMF warnings.

Australian Dollar (AUD)
After domestic data printed positively on Friday, the Australian Dollar (AUD) strengthened versus many of its rivals. The AiG Performance of Construction Index climbed from 47 to 47.8 in May, although output still remains in contraction territory. In addition, Foreign Reserves advanced in May. Should US data print positively, however, the ‘Aussie’ (AUD) is likely to soften considerably.

New Zealand Dollar (NZD)
The New Zealand Dollar gained versus many of its peers despite a complete absence of domestic data. Some gains can be attributed to tracking the Australian Dollar uptrend. Additionally, market sentiment improved after the IMF suggested that the Federal Reserve delay a benchmark rate increase.

Canadian Dollar (CAD)
As traders await news from the OPEC meeting on Friday, the Canadian Dollar slumped versus its major rivals. The likelihood of increased oil output, and therefore lower prices, is weighing on demand for the commodity-correlated currency. Canadian labour market data, due for publication later on Friday, is likely to have a significant impact on ‘Loonie’ (CAD) volatility.

As of Friday, 5th June 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.3747, GBP USD exchange rate was 1.5277, GBP AUD exchange rate was 2.0048, GBP NZD exchange rate was 2.1681, and GBP CAD exchange rate was 1.9013.

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