Pound (GBP) Declines despite Sunak Victory
The Pound (GBP) was mixed during Monday’s trade, initially finding some success as it looked increasingly likely that former Chancellor Rishi Sunak – considered a safe pair of hands – would be crowned as the UK’s new Prime Minister.
However, Sterling slipped in the afternoon as worries about the economy weighed on GBP. The UK’s flash PMIs yesterday morning revealed a worse-than-expected contraction in the country’s services sector.
Later this morning, the latest reports from the Confederation of British Industry (CBI) could impact the Pound. Economists expect declines in business optimism and factory order expectations, which could add to concerns about Britain’s ailing economy.
Euro (EUR) Firms on ECB Bets
The Euro (EUR) strengthened yesterday as markets bet on a hawkish hike from the European Central Bank (ECB) ahead of its interest rate decision on Thursday.
EUR’s upside came despite dismal PMIs. The flash Eurozone surveys pointed to a deepening contraction in business activity in the bloc.
Turning to today, Germany’s business climate indicator held steady, rather than dropping as expected. As a result, EUR investors may now turn their attention to the news coming out of Ukraine.
US Dollar (USD) Hits Ceiling as PMIs Disappoint
The US Dollar (USD) initially ticked higher yesterday as risk aversion swept markets. Meanwhile, an uptick in US Treasury yields also lifted the ‘Greenback’.
However, a turnaround in the market mood and weaker-than-expected US PMIs stopped the ‘Greenback’ in its tracks in the afternoon.
Looking ahead, the latest American consumer confidence data is due out this afternoon. Economists expect a modest drop – could a surprise result prompt sharper movement?
Canadian Dollar (CAD) Muted as Oil Prices Wobble
The commodity-linked Canadian Dollar (CAD) was subdued yesterday as volatile oil prices and a lack of high-impact data left the ‘Loonie’ without much support.
Canadian data remains thin on the ground today, so crude prices could continue to drive CAD movement.
Australian Dollar (AUD) Edges Up as Risk Appetite Improves
The Australian Dollar (AUD) trudged higher in overnight trade after yesterday’s poor US data dampened Fed rate rise bets, thereby supporting the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Ticks Higher amid Positive Trade
Likewise, the New Zealand Dollar (NZD) recovered some of the previous day’s losses last night amid a slight improvement in market mood.