Pound Slides following Impasse in EU-UK Talks

Pound (GBP) Dented by Failed Brexit Talks

The Pound (GBP) slumped yesterday after EU-UK talks over the Northern Ireland protocol failed to break the deadlock.

Fears that the tensions could escalate into a trade war weighed heavily on the pound, with the European Commission Vice-President Maroš Šefčovič saying that the EU will react ‘swiftly, firmly and resolutely’ if the UK fails to uphold the agreement.

The Brexit impasse saw GBP relinquish the modest gains it had made in the morning after Bank of England (BoE) Chief Economist Andy Haldane said that the UK ‘may need to start turning off the stimulus tap.’

With no upcoming data releases from the UK today, coronavirus developments are likely to drive GBP movement, with any negative news potentially putting more pressure on the Pound.

Euro (EUR) Climbs amid Reopening Optimism

The Euro (EUR) trended higher in yesterday’s session, with EUR/GBP exchange rates benefitting from the downside in Sterling.

The single currency was also buoyed by hopes around the further reopening of economies in the Euro area, with France and Belgium lifting more restrictions and the bloc’s vaccination programme continuing to advance.

Today could see some big shifts in EUR exchange rates, with the European Central Bank’s interest rate decision and the expected publication of the bank’s monetary policy strategy review, potentially infusing volatility in the Euro.

US Dollar (USD) Volatile on Treasury Yields

The US Dollar fluctuated through yesterday’s session, initially slipping on low treasury yields before rebounding in the afternoon.

US 10-year yields dropped to a three-month low of 1.47% yesterday morning before slowly rising to 1.50%, causing demand in the US Dollar to soften and then somewhat recover as the day went on.

Turning to today, the US consumer price index figures are expected to show that inflation is continuing to increase. This could boost the US Dollar amid speculation that the Federal Reserve may begin to consider tapering its bond purchases.

Canadian Dollar (CAD) Spikes as Oil Prices Rally

The Canadian Dollar (CAD) temporarily spiked yesterday morning amid rallying oil prices and low US bond yields.

However, the oi-sensitive ‘Loonie’ lost its gains over the course of the day as the US Dollar strengthened and WTI crude dropped by over $1.

Australian Dollar (AUD) Makes Modest Gains on US-China Trade

The Australian Dollar (AUD) traded in a narrow range overnight, making some modest gains on the back of talks between heads of commerce in the US and China in which they agreed to ‘properly handle differences’.

New Zealand Dollar (NZD) Steady following Card Sales Data

The New Zealand Dollar (NZD) trended slightly higher in overnight trade against many of its peers following the New Zealand electronic retail card spending figures, which showed that credit card spending was up 1.7% in May, beating expectations of a 0.6% jump.

Samuel Birnie

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