Pound Wavers on Cautious Tone ahead of UK Reopening Announcement

Pound (GBP) Dips and Rebounds ahead of Reopening Decision 

The Pound (GBP) fell yesterday morning before rebounding in the afternoon, as minsters struck a more cautious tone ahead of Boris Johnson’s reopening announcement. 

Concerns that the UK’s fourth stage of lockdown lifting would remove less restrictions than initially believed weighed on Sterling, as it would both highlight the potential risks of unlocking and could lead to a slower recovery. 

However, the Pound found support as health secretary Sajid Javid gave reassurances that the next stage of the roadmap would go ahead as planned. 

Today the Pound could continue to climb, buoyed by Johnson’s confirmation that the UK economy will reopen on 19 July. However, with the PM’s more cautious tone, declaring that ‘this pandemic is not over’, the upside may be tempered somewhat. 

Euro (EUR) Softens on Coronavirus Concerns 

The Euro (EUR) initially rose yesterday, supported by German wholesale prices, but dipped as the day went on. 

Coronavirus worries still weigh on the single currency, with France and the Netherlands tightening restrictions on Monday night amid the continent’s surge in Delta variant cases. 

Turning to today, with no surprises from Germany’s inflation figures, coronavirus developments in Europe could influence EUR. 

US Dollar (USD) Loses Gains on Upbeat Market Mood 

The US Dollar (USD) climbed yesterday morning amid a rise in US Treasury yields. 

However, USD shed its gains in the afternoon as a shift in risk sentiment dampened demand for the safe-haven ‘Greenback’. 

Looking ahead, the US inflation rate figures are set to ease slightly from 5% to 4.9%. Sustained high inflation could boost the US Dollar, as it suggests a strong economic recovery and could fuel taper talk at the Federal Reserve. 

Canadian Dollar (CAD) Firms on Recovering Oil Prices 

The Canadian Dollar (CAD) made some modest gains yesterday, as a small recovery in oil prices in the afternoon buoyed the commodity-linked ‘Loonie’. 

Besides oil prices, the Canadian Dollar could be influenced by the US inflation rate figures later today. An upside in USD could dent CAD by way of the pair’s negative correlation. 

Australian Dollar (AUD) Capped by Business Confidence 

The Australian Dollar (AUD) firmed overnight amid a bearish market mood. 

However, the upside was potentially capped by Australia’s latest business confidence index, which came in at 11, well below expectations of 19. 

New Zealand Dollar (NZD) Rangebound despite Risk-On Trade 

The New Zealand Dollar (NZD) struggled to hold onto any gains in overnight trade, despite a risk-on market sentiment.