Pound (GBP) Firms ahead of G7 Summit
The Pound (GBP) strengthened against many of its peers on Friday as the G7 summit got underway in Cornwall.
The upside in the Pound came despite rising coronavirus cases and tensions between the UK and the EU over the Northern Ireland protocol, which some fear may spark a trade war.
Looking ahead, Sterling may lose ground today as Boris Johnson is expected to announce that the final stage of easing lockdown will be delayed by four weeks amid rising cases of the Delta variant.
Euro (EUR) Slides on ECB Concerns
The Euro (EUR) continued to slide on Friday, falling to a one-month low against the Pound.
Concerns over the European Central Bank’s (ECB) dovish monetary policy continued to weigh on the Euro following the ECB’s interest rate decision earlier last week.
The single currency was also put under pressure by a rebound in the US Dollar, with the Euro suffering from its negative correlation with the ‘Greenback’.
Today’s industrial production figures from the Eurozone could support the Euro somewhat, with factory output expected to have increased in April. However, continued strength in USD could cap EUR gains.
US Dollar (USD) Rebounds on Cautious Trade
The US Dollar rallied through Friday’s trading session, reaching its highest value against the Euro in almost a month, amid a bearish market mood.
A risk-off sentiment ahead of the Federal Reserve’s interest rate decision on Wednesday has increased demand for the safe-haven ‘Greenback’.
Escalating tensions between the West and China could also be driving the cautious mood after the G7 leaders criticised the latter, leading China to accuse the G7 of ‘political manipulation’.
Today’s consumer inflation expectations for May could further support the US Dollar, as they are forecast to increase to a record high of 3.8%. This may fuel speculation about the Fed’s interest rate decision on Wednesday.
Canadian Dollar (CAD) Dented by USD Strength
The Canadian Dollar (CAD) spiked on Friday before falling back to its morning levels in the afternoon, with the oil-sensitive ‘Loonie’ buoyed by rising crude prices but the pressured as the US Dollar strengthened.
Despite WTI crude prices at highs of $71.50 a barrel this morning, CAD may struggle today as its manufacturing sales figures for April are forecast to have contracted by 1.1%.
Australian Dollar (AUD) Falls amid Cautious Market Mood
The Australian Dollar (AUD) also spiked and then slipped on Friday, impacted by the prevailing risk-off mood.
The cautious sentiment persisted through overnight trade, keeping the ‘Aussie’ somewhat subdued.
New Zealand Dollar (NZD) Slips on Risk-Off Sentiment
Likewise, the New Zealand Dollar (NZD) enjoyed a brief jump before dipping back down, remaining under pressure through overnight trade, amid the current bearish market sentiment.