Pound (GBP) lacks momentum amid domestic data drought
The pound (GBP) traded without clear direction at the start of the week, as a lack of UK economic data left Sterling exposed to global trends.
GBP exchange rates showed limited response to the finalised UK manufacturing PMI, despite a modest upward revision to May’s reading.
Today, attention turns to commentary from Bank of England (BoE) officials, who are scheduled to appear before the Treasury Select Committee, potentially offering clues on future policy moves.
Euro (EUR) steady ahead of ECB decision
The euro (EUR) edged higher on Monday, buoyed by its inverse relationship with a weakening US dollar (USD).
However, upside in the euro remained constrained, with investors cautious ahead of the European Central Bank’s (ECB) policy announcement later this week.
Today, EUR movement may hinge on the Eurozone’s latest inflation data. A slowdown in May’s CPI could reinforce expectations for an imminent rate cut, potentially weighing on the euro.
US dollar (USD) slips on trade and growth worries
The US dollar weakened on Monday, as renewed US-China trade tensions and US President Donald Trump’s decision to raise tariffs on steel and aluminium imports stoked concerns over the US economy.
These fears were compounded by a disappointing US ISM manufacturing PMI, which showed factory activity falling to a six-month low in May.
USD traders now await the latest JOLTs job openings report. A decline in vacancies could fuel recession fears and deepen the dollar’s recent losses.
Canadian dollar (CAD) softens amid US dollar weakness
The Canadian dollar (CAD) weakened at the start of the week, tracking the US dollar lower due to their close correlation.
Moving forward, oil price dynamics may steer the ‘loonie’. A continued recovery in crude markets could lend support to the commodity-linked currency.
Australian dollar (AUD) weakens amid Chinese factory slowdown
The Australian dollar (AUD) fell overnight after China’s Caixin manufacturing PMI revealed an unexpected contraction in April, signalling potential headwinds for Australian exports.
New Zealand dollar (NZD) falls as risk sentiment fades
The New Zealand dollar (NZD) also moved lower overnight, as cautious market mood led to reduced demand for risk-sensitive assets.
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