Pound (GBP) wavers amid UK political uncertainty
The pound (GBP) showed surprising resilience at the close of last week, despite significant Labour setbacks in the UK’s local elections.
Sterling found support after Keir Starmer vowed to remain as Prime Minister, helping to ease the recent rise in UK borrowing costs.
However, markets may have moved too quickly to dismiss political risks, with GBP exchange rates coming under pressure this morning as calls for Starmer’s resignation intensify within the Labour Party.
Euro (EUR) gains limited by weak German figures
The euro (EUR) moved broadly higher on Friday, aided by its inverse correlation with the US dollar (USD).
However, the single currency’s advance was restricted after data revealed an unexpected fall in German industrial production during March.
With Eurozone economic data in short supply at the beginning of this week, the euro may initially struggle to find clear direction.
US dollar (USD) weakens amid improving risk sentiment
The US dollar ended last week on the back foot, surrendering nearly all of the gains made late on Thursday after US President Donald Trump insisted the US-Iran ceasefire remained in place despite renewed clashes in the Strait of Hormuz.
USD also came under pressure as a record slump in US consumer confidence offset a stronger-than-expected payrolls reading.
Unsurprisingly, the US dollar is likely to remain highly sensitive to developments in the Middle East this week, with renewed doubts over a potential peace agreement already supporting USD demand this morning.
Canadian dollar (CAD) pressured by weak labour data
The Canadian dollar (CAD) came under notable pressure on Friday after Canada’s latest employment report unexpectedly showed the labour market contracted last month.
Looking ahead, the ‘loonie’ appears set to strengthen at the beginning of this week amid a recovery in oil prices.
Australian dollar (AUD) supported by Chinese inflation figures
The Australian dollar (AUD) began the week on the defensive amid a more cautious market backdrop, although stronger-than-expected inflation data from China – Australia’s largest trading partner – helped limit the downside.
New Zealand dollar (NZD) retreats amid cautious sentiment
The New Zealand dollar (NZD) also moved lower in overnight trading as a risk-off market mood dampened demand for the ‘kiwi’.
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