Pound (GBP) rebounds as stability returns to UK bond markets
The pound (GBP) emerged as one of Monday’s better performers, recovering the bulk of Friday’s losses as UK bond yields retreated from their recent highs.
Sterling’s advance was also supported by ongoing speculation around Bank of England (BoE) policy, with markets still pricing in three rate increases this year despite signs of easing tensions in the Middle East.
GBP investors will now turn their attention to the UK’s latest services PMI release. March’s preliminary reading will offer an early indication of how the Middle East conflict is affecting the UK economy, with a lacklustre print potentially dragging on the pound.
Euro (EUR) pressured by drop in consumer confidence
The euro (EUR) struggled to gain traction yesterday, as hopes for de-escalation in the Middle East reduced demand for the single currency’s safe-haven appeal.
Additional pressure came from the Eurozone’s latest consumer confidence index, which showed sentiment falling to its lowest level since October 2023.
Looking ahead, the Eurozone’s upcoming PMI releases could weigh on the euro today, with forecasts pointing to sluggish private sector growth amid elevated energy costs and geopolitical uncertainty.
US dollar (USD) dips as Trump hails Iran talks
The US dollar (USD) saw choppy trading at the start of the week. Demand initially surged after President Donald Trump issued a stark warning to Iran, threatening to target its energy infrastructure unless shipping through the Strait of Hormuz resumed.
However, the ‘greenback’ later pulled back after Trump described talks with Iran as ‘very good and productive’, raising hopes of a potential de-escalation and weighing on safe-haven demand.
The US dollar is likely to remain highly reactive to developments in the Middle East today, particularly after Iran insisted that no negotiations with the US have taken place, potentially fuelling renewed volatility.
Canadian dollar (CAD) weakens as oil prices tumble
The Canadian dollar (CAD) declined on Monday as a sharp fall in oil prices, triggered by Trump’s remarks, undermined the commodity-linked currency.
The ‘loonie’ may remain under pressure today if crude prices continue to drift back toward the $100 per barrel level.
Australian dollar (AUD) falls on weak PMI figures
The Australian dollar (AUD) dropped in overnight trade on Monday, with investors unsettled by Australia’s latest PMI data showing the private sector slipped into contraction for the first time in 18 months.
New Zealand dollar (NZD) subdued amid uncertainty
The New Zealand dollar (NZD) traded without clear direction overnight, as Iran’s denial of talks with the US reignited concerns over tensions in the Middle East.
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