Today’s Currency News: Sterling’s Struggles Continue after Dramatic Drop in UK Consumer Spending

Pound (GBP) Remains on the Back Foot after Retail Sales Data

The Pound’s struggles continued on Thursday despite both the UK manufacturing and services PMIs bettering forecasts.

Both sectors remained in a state of contraction, putting the UK economy on course for a significant second quarter slowdown. An unexpectedly sharp decline in the latest CBI industrial trends index offered investors further incentive to sell out of the Pound.

Today’s UK retail sales data piled further pressure on the Pound by showing a -22.6% decline in retail sales year-on-year.

Euro (EUR) Steady before ECB Meeting Minutes

Yesterday’s Eurozone PMI reports showed a rebound in the currency bloc’s service sector in May.

However, the euro’s gains off the back of the report were limited as the sector looks unlikely to return to growth in the near term despite the easing of lockdown restrictions.

If today’s minutes from the last European Central Bank (ECB) policy meeting indicate that further easing could be on the horizon the Euro could dip before the weekend.

US Dollar (USD) Supported by Renewed Demand for Safe-Haven Currencies

Ongoing tensions between the US and China pushed investors back towards safe-haven currencies yesterday, to the benefit of the US Dollar.

USD exchange rates were little affected by another increase in domestic jobless claims.

With no influential US data due for publication today, any further USD movement will be in response to shifts in risk appetite.

Canadian Dollar (CAD) Shakes off Weak Labour Data

The Canadian Dollar (CAD) stood firm yesterday despite a sharp decline in April’s ADP employment figures.

Oil prices ticked higher during Thursday’s European session, keeping a floor under CAD exchange rates.

However, today’s Canadian retail sales data could put CAD under pressure as investors expect the report to show a sharp decline in consumer spending.

Cautious RBA Comments Weigh on Australian Dollar

The Australian Dollar was pressured lower yesterday as Reserve Bank of Australia (RBA) Governor Philip Lowe acknowledged the extent of the uncertainty still surrounding the economic outlook.

A further deterioration in the manufacturing PMI added to the bearish mood, as did rising tensions between the US and China.

New Zealand Dollar Softens, Retail Sales Decline

With markets returning to a risk-off mood the New Zealand Dollar struggled to hold onto a positive footing against its rivals. Growing fears over the possibility of another US-China trade spat left the risk-sensitive NZD lacking in appeal yesterday.

NZD exchange rates remained on the back foot after New Zealand retail sales fell -0.7% quarter-on-quarter.

Louisa Heath

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