Pound (GBP) subdued after Bailey strikes cautious tone
The pound (GBP) traded without clear direction at the close of last week after comments from Bank of England (BoE) Governor Andrew Bailey.
Bailey appeared to dampen expectations for a June rate increase, suggesting that amid continued weakness in economic activity, it’s appropriate for the bank to ‘tolerate temporarily above target inflation’.
With UK economic releases relatively sparse during the opening half of this week, Sterling may struggle to find a clear catalyst for movement today.
Euro (EUR) pressured by weaker German inflation reading
The euro (EUR) found it difficult to gain traction at the end of last week after Germany released its latest inflation figures.
Preliminary CPI data for May unexpectedly showed price pressures easing, prompting some EUR investors to scale back expectations for more aggressive European Central Bank (ECB) tightening later in 2026.
Looking ahead, the ECB’s latest consumer survey could offer support to the single currency if it reveals that inflation expectations continued to trend higher in April.
US dollar (USD) steady as Iran deal optimism offsets Fed support
The US dollar (USD) came under some pressure at the end of last week as growing optimism over a potential US-Iran agreement reduced demand for traditional safe-haven currencies.
Despite this, the ‘greenback’ managed to remain broadly stable after Federal Reserve officials Jeff Schmid and Michelle Bowman delivered relatively hawkish policy remarks.
Away from developments in the Middle East, USD investors will also be monitoring the latest ISM manufacturing PMI this week. If factory activity remains resilient, the US dollar could find additional support.
Canadian dollar (CAD) weakened by disappointing growth figures
The Canadian dollar (CAD) moved lower on Friday after Canada’s latest GDP release indicated the economy stagnated during the first quarter.
The ‘loonie’ could remain under pressure at the start of this week should oil prices continue to drift lower.
Australian dollar (AUD) rangebound after mixed Chinese data
The Australian dollar (AUD) traded sideways during Monday’s Asian session after China, Australia’s largest export market, reported a moderation in manufacturing growth during the previous month.
New Zealand dollar (NZD) slips on profit-taking
The New Zealand dollar (NZD) edged lower overnight, with investors taking profits following the currency’s strong rally last week on rising expectations for further Reserve Bank of New Zealand (RBNZ) interest rate hikes.
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