Pound Finds Fleeting Gains Following Impressive Data
The Pound (GBP) initially struck higher on Friday, with the currency rallying on the back of impressive retail sales figures and a record jump in the UK’s manufacturing PMI.
The better-than-expected data, and a strong services PMI, pushed the Pound US Dollar exchange rate to a three-year high while GBP/EUR firmed at €1.16.
However, Sterling relinquished nearly all of these gains by the end of the European session amid concerns of a deadlock in talks between the UK and EU regarding the Northern Ireland protocol.
Looking ahead, with this week being seen as crucial in determining whether the threat posed by the Indian variant is enough to disrupt the government’s plans to continue easing restrictions, we are likely to see GBP exchange rates particularly vulnerable to any negative coronavirus developments.
Euro Stumbles on Dovish Lagarde Comments
The Euro (EUR) closed last week’s session on a low following comments from European Central Bank (ECB) President Christine Lagarde, in which she sought to quell speculation the bank could soon start discussing the tapering of its bond purchases.
This offset the Eurozone preliminary PMIs for May, which reported the bloc’s private sector experienced its strongest growth since February 2018.
In the spotlight for EUR investors in the first half of this week will be Germany’s latest GDP release, with the finalised figures from the first quarter potentially providing some support to the Euro if the country’s economy contracted less than previously thought.
US Dollar Strengthens on Record Service Sector Growth
The US Dollar (USD) rallied on Friday following the publication of the latest US Markit PMI figures.
While not as influential as the ISM release, the Markit data was still cheered by USD investors as it reported the US service and manufacturing sectors both experienced a record expansion of activity this month, with traders hopeful this will translate into strong employment growth.
Turning to this week’s session, a key focus for USD investors will be the latest durable goods release. Will a robust expansion in US goods orders last month help to propel the US Dollar higher?
Canadian Dollar Firms Following Stronger-than-Expected Retail Sales Growth
The Canadian Dollar (CAD) ticked higher at the end of last week’s session, with data showing a larger-than-expected expansion in domestic retail sales in April, and a rebound in oil prices proving supportive of the ‘Loonie’.
Australian Dollar Muted in Risk-Off Trade
After slumping on Friday, the Australian Dollar (AUD) remained dejected at the start of this week’s session, with the ‘Aussie’ facing pressure during Asian trading hours amidst a prevailing risk-off mood.
New Zealand Dollar Weakens despite Upbeat Retail Figures
The New Zealand Dollar (NZD) also trended lower during Monday’s Asian session as the fall in market risk appetite offset data showing a healthy rebound in domestic retail sales growth in the first quarter of 2021.