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FX round-up: Sterling drifts Wednesday to make mild gains on dollar, euro

Currencies

FX round-up: Sterling drifts Wednesday to make mild gains on dollar, euro

Wed, 12 April 2017
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FX round-up: Sterling drifts Wednesday to make mild gains on dollar, euro

(ShareCast News) - Sterling drifted to a mildly positive performances against the US dollar and euro on Wednesday afternoon, but was otherwise mixed on other key crosses in a shortened week of trading ahead of the Easter break.
At 16:57 GMT, sterling was up 0.1% to $1.2504, and up 0.03% to €1.1782. The dollar-spot index was down 0.15% to $100.560.

"The pound hit its highest level against the euro (€1.1790) since February this morning, as data from the Office for National Statistics showed unemployment fell by 45,000 in the three months to February," said Chris Saint, senior analyst at HL Currency Service.

"With the headline unemployment rate holding steady at 4.7%. Sterling's advance came despite annual wage growth (excluding bonuses) slowing to 2.2%, down from 2.4% previously," he said.

"Wage growth is now under yesterday's latest inflation figure of 2.3%, meaning consumers may increasingly start to feel the squeeze as households' real incomes are eroded -- a key reason the Bank of England seems unlikely to lift interest rates anytime soon."

Connor Campbell, financial analyst at Spreadex, said markets were not particularly moved by the UK jobs report this Wednesday, the pound falling flat as the morning progressed.

SwissQuote added in a note that the cable had bounced near the key support at $1.2334, suggesting a potential short-term base formation.

"The falling trend line resistances at $1.2500 has been breached. Hourly resistance can be located at $1.2506 and ... and an hourly support can be found at $1.2405."

Sterling and the dollar were up on the aussie and kiwi, but down on the loonie, rand and yen.

The dollar's overall weakness on Wednesday -- as measured by the dollar-spot index -- was amid tensions between the US and both North Korea and Russia, the latter over Syria.

"Geopolitics may have been the centre of attention over recent weeks, yet we are expecting to see the onus switch to US earnings from here on in," said IG market analyst Joshua Mahony.

"Tomorrow's financial reports from the likes of JP Morgan, Citigroup and Wells Fargo should provide us with an upbeat start to earnings season given the expectation of a reduction in US banking regulations, alongside the upward path of (US) interest rates," he said.

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