Pound (GBP) weakens as Starmer’s position remains uncertain
The pound (GBP) came under pressure yesterday as mounting numbers of MPs urged Prime Minister Keir Starmer to stand down.
While GBP briefly steadied after Starmer told his cabinet he had no intention of resigning, Sterling then encountered fresh selling pressure as four ministers quit the government in protest.
Today, the pound has stabilised as Starmer appears to have weathered the immediate threat. However, bond markets remain nervous. Later in the session, a speech from Bank of England (BoE) policymaker Catherine Mann may influence GBP movement, with any signals in favour of an interest rate hike potentially offering Sterling support.
Euro (EUR) stumbles as USD strengthens
The euro (EUR) weakened yesterday, pressured by its negative correlation with the US dollar (USD) as the latter attracted support.
However, EUR avoided steeper losses following stronger-than-forecast German data. Germany’s ZEW economic sentiment index unexpectedly improved in May.
Looking ahead, a projected slowdown in Eurozone industrial production in March may apply mild pressure to EUR exchange rates today.
US dollar (USD) climbs amid Fed rate hike speculation
The US dollar advanced yesterday, with the safe-haven currency initially supported by a cautious market mood after President Donald Trump warned that the US-Iran ceasefire was on ‘massive life support’.
The ‘greenback’ retained its upward momentum later in the session following the latest US consumer price index. As inflation accelerated from 3.3% to 3.8% in April, investors raised their expectations for a Federal Reserve interest rate hike this year.
Today, the focus turns to April’s US producer price index. Should factory gate inflation show a similar increase, USD could build on its recent gains.
Canadian dollar (CAD) edges up as oil prices strengthen
The commodity-linked Canadian dollar (CAD) firmed yesterday as rising oil prices lent support to the currency.
Crude price movements are likely to remain the main driver of CAD exchange rates today, with the ‘loonie’ set to climb if oil prices stay elevated.
Australian dollar (AUD) holds firm amid upbeat trade
The Australian dollar (AUD) held steady overnight, after strengthening yesterday evening, as a risk-on mood across Asian markets helped keep the ‘Aussie’ supported.
New Zealand dollar (NZD) softens amid domestic growth concerns
The New Zealand dollar (NZD) weakened overnight, despite a Reserve Bank of New Zealand (RBNZ) survey showing that business inflation expectations rose in the second quarter, as the report also pointed to higher unemployment and weaker economic growth.
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