Pound (GBP) finds backing after Starmer signals closer EU ties
The pound (GBP) drew mild support during yesterday’s session after Prime Minister Keir Starmer signalled an intention to deepen trade links with the European Union.
Comments around closer alignment with the EU single market were well received by GBP investors, who see improved relations with Europe as supportive of UK growth prospects and investment opportunities.
Attention now turns to the UK’s services PMI, with December’s final reading potentially weighing on Sterling if, like manufacturing, it is revised lower.
Euro (EUR) pressured by Russia and Greenland concerns
The euro (EUR) slipped on Monday as markets mulled the wider implications that the US intervention in Venezuela could have for Europe.
Alongside concerns about emboldening Russia’s actions in Ukraine, investors also viewed US President Donald Trump’s repeated remarks about Greenland in a new light.
Germany’s latest CPI figures take centre stage today, with December’s preliminary data expected to show slower inflation and possibly extend pressure on the euro.
US dollar (USD) supported by global political tensions
The US dollar (USD) initially firmed on Monday as US military action in Caracas and the detention of Venezuelan President Nicolás Maduro fuelled safe-haven demand.
However, these gains faded later in the day after a weaker-than-expected ISM manufacturing PMI and comments from a Federal Reserve official highlighting labour market risks.
Looking ahead, sustained focus on Venezuela and the broader consequences of US-led regime change could keep investors favouring the safe-haven greenback.
Canadian dollar (CAD) weighed down by Monroe Doctrine fears
The Canadian dollar (CAD) retreated on Monday as US action in Venezuela revived unease around Trump’s past comments suggesting Canada could become the 51st state.
These concerns may continue to hang over the ‘loonie’ today, although further gains in oil prices could help limit additional downside.
Australian dollar (AUD) jumps on RBA tightening expectations
The Australian dollar (AUD) climbed overnight on Monday as markets grew more confident that the Reserve Bank of Australia (RBA) may raise interest rates in the months ahead.
New Zealand dollar (NZD) supported as risk appetite improves
The New Zealand dollar (NZD) also advanced in overnight trade, with a brighter market mood lending support to the risk-sensitive ‘kiwi’.
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