Pound (GBP) strengthened by renewed UK-US trade optimism
The pound (GBP) edged higher yesterday as the uplift in global risk appetite helped buoy the currency.
Adding to Sterling’s gains was renewed speculation that the UK may be nearing a breakthrough in trade talks with the US, raising hopes of a potential exemption from incoming tariffs.
However, the pound is facing some pressure this morning after the UK’s latest labour figures revealed a slowdown in wage growth, fuelling speculation of a potential Bank of England (BoE) rate cut in May.
Euro (EUR) dips on profit-taking pullback
The euro (EUR) faced headwinds at the start of the week as investors looked to lock in profits following a recent strong run of gains.
EUR exchange rates have enjoyed a notable rally amid persistent US dollar (USD) weakness, but with the European Central Bank (ECB) due to announce its latest rate decision soon, markets opted for caution.
Further losses could be in store for the euro if Germany’s upcoming ZEW economic sentiment index confirms another sharp drop in business confidence.
US dollar (USD) wavers amid mixed tariff messages
The US dollar was placed on the defensive yesterday after conflicting signals from President Trump’s social media activity reignited confusion over trade policy.
His posts appeared to contradict reports over the weekend that certain electronics would be excluded from the newly proposed 145% tariffs on Chinese imports, shaking investor confidence.
If this lack of clarity continues to weigh on sentiment, the dollar may struggle to find its footing in today’s session.
Canadian dollar (CAD) weak despite oil recovery
The Canadian dollar (CAD) drifted lower on Monday, as the currency failed to take full advantage of a modest recovery in crude oil prices.
All eyes will now be on Canada’s upcoming inflation figures, which could offer support to the ‘loonie’ if they strengthen expectations of a more hawkish stance from the Bank of Canada (BoC) ahead of Wednesday’s policy meeting.
Australian dollar (AUD) strengthens on cautious RBA tone
The Australian dollar (AUD) advanced overnight on Monday, after the Reserve Bank of Australia’s (RBA) meeting minutes indicated policymakers are hesitant to signal additional interest rate cuts at this stage.
New Zealand dollar (NZD) climbs amid upbeat risk sentiment
The New Zealand dollar (NZD) also gained ground overnight, drawing strength from the broader appetite for risk-sensitive assets.
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