Pound and Euro Subdued amid Political and Economic Headwinds

Pound (GBP) Muted as Economic Concerns Continue

The Pound (GBP) fell against many of its peers on Friday as UK economic headwinds continued to buffet Sterling.

As the country weathers a worsening cost-of-living crisis, the row over the Northern Ireland protocol threatens to further stifle the UK economy.

With no UK data out today, these domestic concerns may continue to weigh on the Pound.

Euro (EUR) Dented by Declining Industrial Production

The Euro (EUR) slipped at the end of last week as a 1.8% decline in Eurozone industrial production weighed on EUR exchange rates.

In addition, ongoing worries about a potential escalation in the Russia-Ukraine crisis pressured the Euro. As it became clear that Finland was likely to request to join Nato, Russia threatened to retaliate.

Looking ahead, the Eurozone’s latest trade data may bolster EUR. Economists expect the Eurozone’s trade balance to have returned to a surplus in March.

US Dollar (USD) Undermined by Consumer Confidence Slump

The US Dollar (USD) initially strengthened on Friday, despite a risk-on mood, as Federal Reserve rate hike bets underpinned the currency.

However, a larger-than-expected drop in US consumer confidence hit USD in the afternoon. The poor data seemed to temper rate rise bets, causing the ‘Greenback’ to soften.

Amid a lack of notable US data today, risk appetite could be the dominant factor in USD exchange rates.

Canadian Dollar (CAD) Firms as Crude Prices Climb

The oil-sensitive Canadian Dollar (CAD) gained ground on Friday as oil prices rose by over $3 to hit $110 a barrel.

In the absence of market-moving Canadian data today, movements in the oil market may continue to drive CAD exchange rates.

Australian Dollar (AUD) Dips on Dire Chinese Data

The China-proxy Australian Dollar (AUD) fell sharply overnight after some dire Chinese data. Retail sales plunged by 11.1% and industrial production fell by 2.9% year on year in April. In addition, the unemployment rate rose from 5.8% to 6.1%.

New Zealand Dollar (NZD) Drops as China Slowdown Spooks Markets

The risk-sensitive New Zealand Dollar (NZD) also slid in overnight trade as the worrying Chinese data rattled investors.

Samuel Birnie

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