Pound (GBP) weighed down by higher gilt yields
The pound (GBP) found it difficult to build momentum at the beginning of the week as UK borrowing costs moved higher once again.
Yields on 10-year gilts climbed back towards the 5% mark, reaching their strongest levels in more than a fortnight amid concerns over stubborn inflation and rising global interest rates.
With no major UK data releases scheduled, Sterling may continue to take its cues from developments in the bond market through today’s session.
Euro (EUR) supported despite weak German orders data
The euro (EUR) advanced on Monday, drawing support from its inverse relationship with the US dollar (USD).
However, gains for the single currency were tempered after figures revealed German factory orders contracted by more than forecast in April.
Looking ahead, the euro could find support today after Germany reported an unexpected rise in exports during April.
US dollar (USD) falls as Middle East tensions ease
The US dollar weakened by the end of yesterday’s session as easing geopolitical tensions undermined demand for safe-haven assets.
Improving market sentiment also appeared to encourage some investors to lock in profits on the ‘greenback’ following its strong rally at the end of last week on the back of upbeat US employment figures.
Meanwhile, the US dollar is facing additional pressure this morning after President Donald Trump stated that negotiations between the US and Iran are entering their final stages.
Canadian dollar (CAD) pressured by softer oil prices
The Canadian dollar (CAD) edged lower on Monday after an early rally in oil prices faded amid signs of de-escalation in the Middle East.
Meanwhile, movement in the ‘loonie’ may prove subdued today as investors await the Bank of Canada’s (BoC) latest interest rate announcement.
Australian dollar (AUD) uplift limited by weaker confidence readings
Although an improvement in market sentiment helped the Australian dollar (AUD) move higher overnight on Monday, gains were constrained by another decline in domestic consumer and business confidence.
New Zealand dollar (NZD) climbs on improving risk sentiment
The New Zealand dollar (NZD) jumped in overnight trade as growing optimism surrounding a potential Middle East peace agreement boosted demand for risk-sensitive currencies.
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