Pound (GBP) rangebound amid Labour tensions
The pound (GBP) traded in a narrow range yesterday in the absence of any notable UK economic data.
Sterling sentiment was also dampened by signs of internal friction within the Labour party, after allies of Prime Minister Keir Starmer reportedly moved to prevent Andy Burnham from standing as an MP and mounting a potential leadership challenge in the future.
UK data remains thin on the ground today, which may leave the pound lacking a clear directional bias.
Euro (EUR) lifted by weaker USD
The euro (EUR) advanced on Monday, with the single currency drawing much of its support from its inverse relationship with the US Dollar (USD).
However, the upside proved limited after Germany’s latest IFO business climate survey missed expectations, tempering optimism for a strong start to the year in the Eurozone’s largest economy.
With few Eurozone releases scheduled today, trading conditions in the euro may remain subdued.
US dollar (USD) slides on tariff and shutdown jitters
The US dollar began the week under pressure, sliding to fresh multi-year lows amid uncertainty surrounding US tariffs and the risk of a government shutdown.
Losses then deepened later in the session, despite upbeat data revealing a stronger-than-forecast rebound in US durable goods orders in November.
Looking ahead, today’s ADP employment report could keep the pressure on the US dollar if it fuels concerns about the resilience of the US labour market.
Canadian dollar (CAD) pressured by tariff risk
The Canadian dollar (CAD) weakened on Monday after US President Donald Trump threatened to impose a 100% tariff on Canadian goods should Canada strike a trade agreement with China.
Unless Trump rows back on these comments, tariff fears may continue to drag on the ‘loonie’ today.
Australian dollar (AUD) briefly supported by improving business sentiment
The Australian dollar (AUD) fluctuated in overnight trade, with a stronger-than-expected business confidence reading offering only short-lived support to the ‘Aussie’.
New Zealand dollar (NZD) subdued in risk-averse mood
The New Zealand dollar (NZD) was also subdued overnight on Monday, as a cautious market environment weighed on the risk-sensitive ‘kiwi’.
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