Pound Struggles as UK Supply Chain Crisis Continues

Pound (GBP) Pressured as Staff and Supply Issues Worsen 

The Pound (GBP) lost ground against most of its major rivals yesterday, as the UK’s supply chain crisis continued to weigh on Sterling. 

The UK’s construction PMI dropped to a five-month low due to Brexit-related staff shortages and soaring prices as global demand rises. 

With no notable UK data due out today, rising UK Covid cases and supply chain concerns could continue to weigh on the Pound. 

Euro (EUR) Muted on Mixed Data 

The Euro (EUR) had a mixed day yesterday as surprise growth in German factory orders was offset by falling Eurozone investor confidence. 

EUR exchange rates were initially supported after German factory orders unexpectedly grew by 3.4% in July, versus the -1% predicted. However, the Sentix investor confidence report showed that confidence in the Eurozone had dropped to its lowest level since April this year. 

Looking ahead, the Euro faces more mixed data this morning. The latest GDP growth and employment change figures are forecast to be fairly positive, but the ZEW economic sentiment indexes for Germany and the Eurozone are expected to hit their worst levels since April 2020. 

US Dollar (USD) Rangebound amid Lack of Data 

The US Dollar (USD) traded mostly sideways yesterday, gaining some ground against a few of its peers, as a US holiday resulted in thin trading conditions in the currency. 

After a modest overnight rebound, the ‘Greenback’ stayed in a narrow range as market sentiment held steady. 

In the absence of any key US data today, risk appetite could play a large part in USD exchange rates. 

Canadian Dollar (CAD) Rebounds as Oil Prices Rally 

The Canadian Dollar (CAD) initially dipped yesterday, but the commodity-linked ‘Loonie’ managed to regain ground amid a recovery in oil prices. 

Crude dipped earlier this morning, but if it can climb again today then CAD may make some gains. 

Australian Dollar (AUD) Dips as RBA Extends Bond Purchases 

The Australian Dollar (AUD) spiked and then dropped overnight after the Reserve Bank of Australia (RBA) decided to extend bond purchases until at least mid-February as the Delta variant delays Australia’s economic recovery.  

New Zealand Dollar (NZD) Drops with AUD 

The New Zealand Dollar (NZD) also slipped in overnight trade due to its positive correlation with the ‘Aussie’.