Another relatively subdued night on the currency markets overnight with one exception being the UK Pound. The British Pound gave up a lot of ground mainly against the Australian and New Zealand Dollars losing in the region of half of 1 percent.
There seemed to be no real fundamental catalyst to explain the drop, in fact if anything we received stronger than expected manufacturing Production data which shows that the manufacturing sector in the UK continues to expand at a nice steady rate.
As a result of last night’s selloff against the Aussie , the Pound has now broken out of a trading range which had held in place for the last 2 months, the range having an upward bias that gave thought to Sterling appreciating over time against the Dollar as long as it remained within that range. Yesterdays break to the downside of that range now causes a potential change in direction of this pair, with Sterling now susceptible to a larger correction.
On the economic front going forward what could change this perception is UK Unemployment and data set to be released tonight. Analysts are expecting a slight fall in jobs created from 283k jobs last month to this month 270k. Having said that, they are looking for the overall Unemployment rate to fall to 6.7%.
If we get a positive unemployment print from the UK, this could help the GBP to regain its lost ground against the Antipodean currencies, all of which could be short lived as Australia is releasing the equivalent data on Thursday morning ….I guess the old saying of watch this space is quite apt.