Published: 10/07/2023 By ECAPSterling remains 2023's top performing currency, but the first major test of July comes into view with tomorrow’s UK labour market data. Indeed, the data comes as markets are prepared for the Bank of England to raise interest rates a further 150-basis points in its fight against inflation, an expectation that has ensured the pound remains well supported.
The European shared currency also remains well supported by continuous hawkish commentary from several European Central Bank policymakers, backing the case for additional rate hikes in July and September meetings. This, in turn, is seen acting as a tailwind for the bloc’s single currency and limiting potential downside drops, warranting some caution for market participants.
The Dollar was widely sold in the immediate aftermath of last Friday’s U.S. Non-Farm Payroll read. This is the first time that the report has undershot expectations in 15 months. Ultimately, if analysts see even the smallest indication that the labour market in the US is not as robust as expected, many anticipate that this could create further headwinds for the greenback.