Pound (GBP) dips as real incomes decline
The pound (GBP) weakened at the start of this week, despite confirmation that the UK economy was the fastest-growing economy in the G7 in the first quarter.
Sterling was knocked by accompanying figures that showed real household disposable income per head fell for the first time in nearly two years, dampening investor confidence.
Looking ahead, Bank of England (BoE) Governor Andrew Bailey is due to speak at the European Central Bank’s (ECB) annual forum in Sintra today. Investors will be listening closely for any signals on the BoE’s policy outlook.
Euro (EUR) muted following weak German inflation data
The euro (EUR) was on the back foot yesterday, as investors digested a mixed set of economic indicators from Germany.
The euro came under pressure in the latter part of the session, after German inflation slowed unexpectedly in June, suggesting price pressures may be easing.
If today’s Eurozone-wide CPI release echoes this trend, it could boost expectations for further European Central Bank (ECB) rate cuts and drag the euro lower.
US dollar (USD) falters amid renewed deficit worries
The US dollar (USD) opened this week on softer footing, as markets reacted to news that President Donald Trump’s flagship tax and spending package narrowly cleared its first Senate hurdle.
The renewed focus on the bill reignited concerns over the ballooning US deficit, especially following new projections that it could add $3.3 trillion to government debt over the next ten years.
All eyes today will be on US labour and manufacturing data. Any sign of cooling in either could reinforce speculation over Federal Reserve interest rate cuts and weigh on USD exchange rates.
Canadian dollar (CAD) steady as digital tax dropped
The Canadian dollar (CAD) held its ground on Monday, recovering some lost ground after the Canadian government agreed to scrap its digital services tax plan, paving the way for renewed trade discussions with the US.
Unless fresh trade headlines emerge, oil price movements are expected to drive CAD direction through today’s session.
Australian dollar (AUD) rallies on strong Chinese data
The Australian dollar (AUD) advanced in overnight trade, finding support after China’s Caixin manufacturing PMI showed an unexpected recovery in factory output in June.
New Zealand dollar (NZD) lifted by upbeat sentiment
The New Zealand dollar (NZD) also edged higher overnight, as a broadly risk-on mood in markets supported demand for the risk-sensitive currency.
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