Pound (GBP) supported as Burnham uncertainty eases
The pound (GBP) traded on firm footing at the end of last week, with Sterling posting gains against most of its peers, with the exception of the euro.
Confidence in GBP improved as concerns surrounding the political outlook continued to diminish, with investors increasingly convinced that Andy Burnham would retain Rachel Reeves’s fiscal framework if he becomes Prime Minister.
At the start of this week, GBP investors are likely to remain focused on political developments as speculation continues over the composition of Burnham’s future cabinet.
Euro (EUR) lifted by safe-haven demand
The euro (EUR) strengthened on Friday, with the single currency benefiting from renewed demand for defensive assets amid cautious market sentiment.
Additional support came from the euro’s inverse relationship with the US dollar (USD), as the ‘greenback’ weakened into the weekend.
Attention now turns to the opening of the European Central Bank’s (ECB) annual Sintra Forum, where EUR investors will be monitoring policymakers for fresh clues regarding the future direction of monetary policy.
US dollar (USD) pressured by profit-taking
The US dollar finished last week on the defensive as traders locked in gains after the currency’s strong performance earlier in the week.
That said, losses in the ‘greenback’ were limited by persistent volatility in equity markets as the technology sector remained under pressure.
With no major US economic data scheduled, broader market sentiment is expected to be the main driver of the US dollar at the beginning of this week.
Canadian dollar (CAD) weakened by lower oil prices
The Canadian dollar (CAD) came under pressure on Friday as falling oil prices continued to reduce demand for the commodity-linked currency.
The ‘loonie’ is expected to remain sensitive to movements in crude prices this week, with any further declines likely to weigh on CAD exchange rates.
Australian dollar (AUD) subdued amid cautious market mood
The Australian dollar (AUD) remained trapped in a narrow range through the opening of this week after renewed US-Iran clashes over the weekend undermined confidence in ongoing peace negotiations.
New Zealand dollar (NZD) resilient despite cautious sentiment
Unlike the Australian dollar, the New Zealand dollar (NZD) managed to strengthen during Monday’s Asian session, despite the broader risk-off tone across financial markets.
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