Pound (GBP) resilient as markets shrug off Starmer departure
The pound (GBP) remained broadly stable at the beginning of this week despite Prime Minister Keir Starmer confirming he would step down after less than two years in office.
With widespread speculation surrounding his resignation having circulated over the weekend, investors appeared largely prepared for the announcement. Sterling was further supported as UK gilt yields moved lower in its aftermath.
Attention now turns to the UK’s latest PMI releases. After private sector activity contracted in May, a return to growth in June could provide the pound with additional support.
Euro (EUR) weakened by dovish Lagarde comments
The euro (EUR) came under pressure on Monday following remarks from European Central Bank (ECB) President Christine Lagarde.
Addressing a committee of the European Parliament, Lagarde indicated that recent inflation developments do not currently justify a stronger monetary policy response from the ECB.
Investors will also be monitoring the Eurozone’s latest PMI figures today. Should June’s preliminary reading reveal a third straight decline in private sector activity, the single currency could face renewed selling pressure.
US dollar (USD) supported by cautious market sentiment
The US dollar (USD) enjoyed modest gains yesterday as uncertainty surrounding the early stages of US-Iran technical talks encouraged demand for safe-haven assets.
The ‘greenback’ also benefited from growing speculation for a Federal Reserve interest rate hike before the end of the summer.
With little in the way of notable US data releases today, broader market sentiment is expected to remain the main driver of movement in the US dollar.
Canadian dollar (CAD) bolstered by stronger inflation data
The Canadian dollar (CAD) traded on a firm footing on Monday after inflation data exceeded expectations, strengthening the case for additional tightening from the Bank of Canada (BoC).
Looking ahead, the ‘loonie’ may find it difficult to build on these gains if oil prices remain under pressure through today’s session.
Australian dollar (AUD) slips despite encouraging PMI figures
The Australian dollar (AUD) moved lower during Monday night’s trading, as worsening market sentiment outweighed stronger-than-expected PMI readings from Australia.
New Zealand dollar (NZD) weighed down by risk aversion
The New Zealand dollar (NZD) also came under pressure overnight as investors reduced exposure to risk-sensitive currencies amid a more cautious market backdrop.
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