Pound US Dollar Exchange Rate Tumbles on Dismal PMI Reading, GBP/EUR Slides
The Pound suffered a sharp sell-off at the end of last week.
In response to dire PMI figures that revealed UK economic activity contracted more than expected this month, the Pound US Dollar exchange rate fell back to $1.36.
Adding to Sterling’s woes were the UK’s latest retail sales figures, which reported a smaller-than-forecast expansion of sales growth, and that the UK saw a record fall in retail sales in 2020 as a whole.
Looking ahead, the Pound could face additional headwinds through the first half of this week as the UK’s latest jobs figures are expected to report that domestic unemployment passed 5% in November, amidst a second national lockdown.
Euro Strengthens as PMIs Beat Expectations
EUR exchange rates struck higher at the end of last week’s session, with the single currency advancing as a result of the Eurozone’s latest PMI figures.
January’s preliminary readings printed above expectations, stirring hopes that the bloc’s likely economic contraction in the first quarter of 2021 will be smaller than first feared.
Coming up this week, there will be a slew of German data releases to keep EUR investors busy, kicking off with today’s IFO business climate index, with the Euro potentially facing some pressure this morning as business sentiment deteriorated this month.
US Dollar Buoyed in Gloomy Trade
The US Dollar initially strengthened on Friday, with investors favouring the safe-haven currency amidst a souring of market sentiment
However, the ‘Greenback’ was forced to give some ground toward the end of the session after Joe Biden’s speech outlining his economic plans helped to alleviate some of the risk-off tone.
Turning to this week’s session, the focus for USD investors is likely to be on the latest US GDP figures, where a positive reading could cheer market sentiment at the expense of USD.
Canadian Dollar Undermined by Slump in Oil Prices
The Canadian Dollar retreated on Friday, with the ‘Loonie’ unable to benefit from a stronger-than-expected retail sales release as the appeal of the commodity-linked currency was dented by a slump in oil prices.
Australian Dollar Rallies on Vaccine Approval
After collapsing at the end of last week amidst the souring of market sentiment, AUD exchange rates rallied during today’s Asian session following the news that Australia has given its approval for the Pfizer vaccine.
New Zealand Dollar Rebounds as Market Sentiment Improves
The New Zealand Dollar is also recouping some of Friday’s losses in early trade today as the risk sentiment ‘Kiwi’ is bolstered by improving market sentiment.