Pound Holds Steady, Euro Firms and US Dollar Dips

Pound (GBP) Steady despite Delay to Lockdown Lifting

The Pound (GBP) slipped yesterday, hitting a one-month low against the US Dollar (USD), before bouncing back and holding its ground as the day went on.

The initial downside in Sterling came amid reports that the UK will delay its full lifting of lockdown restrictions by four weeks, with investors concerned this may slow the country’s economic recovery.

The ongoing Brexit dispute over the Northern Ireland protocol also weighed on the Pound, though news that the EU and the UK will attempt to settle the issue later this week may have taken the edge off.

Today, the UK’s employment data could help boost Sterling after the increase in average earnings in April and the decline in unemployment benefits claimants in May both beat market expectations.

Euro (EUR) Regains Ground on Industrial Production

The Euro (EUR) edged up through yesterday’s session, buoyed by better-than-expected industrial production figures.

Month-on-month industrial production in the Eurozone increased by 0.8% in April, beating market forecasts of a 0.4% rise, giving the Euro a much-needed boost.

Looking ahead, the EU’s balance of trade figures for April could impact the single currency, with the bloc’s trade surplus expected to narrow by €1.4bn. Could the figures exceed market expectations?

US Dollar (USD) Falls Slightly ahead of Fed Decision

The US Dollar experienced modest losses yesterday, with investors seemingly hesitant ahead of the Federal Reserve’s policy meeting tomorrow.

With no clear driver for the sudden downside in USD, most losses appear to have come from upsides in other currencies.

Turning to today, big data releases from the US may prompt more movement in USD. In particular, retail sales are expected to have contracted by 0.7% in May, which could put some downward pressure on the ‘Greenback’.

Canadian Dollar (CAD) Bounces despite Weak Data

The Canadian Dollar (CAD) fluctuated yesterday, initially slipping but then bouncing back, despite Canadian manufacturing sales figures falling by 2.1% in April, almost double the expected 1.1% contraction.

The commodity-linked ‘Loonie’ was lifted by the ongoing rise in oil prices, with WTI crude hitting $71.72 a barrel – its highest level since October 2018. If crude prices stay strong, the Canadian Dollar could make some gains today.

Australian Dollar (AUD) Dips on RBA Meeting Minutes

The Australian Dollar (AUD) ticked lower in overnight trade following the Reserve Bank of Australia’s (RBA) latest meeting minutes, which reiterated the bank’s cautious approach by saying it would be ‘premature’ to consider tapering bond purchases.

New Zealand Dollar (NZD) Firms on USD Weakness

The New Zealand Dollar (NZD) trended higher overnight, benefitting from its negative correlation to a weaker US Dollar.

Samuel Birnie

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