Pound Sterling

Euro Rises as Eurozone Factory Activity Soars, Pound Slips

Pound News: Could Covid-19 Fears Delay UK Lifting of Lockdown?

The Pound is shedding ground today despite being at a three-year high against the weaker US Dollar on Monday.

In UK economic data news, today saw the release of the latest manufacturing PMI for May, which fell below consensus from 66.1 to 65.6 but still indicated record growth in factory activity.

However, rising cases of Covid-19 in the UK have dampened confidence in the UK government’s plan to further ease lockdown measures on June 21, limiting GBP exchange rates.

Sterling will remain sensitive to news about rising coronavirus cases and the chances of any delays to the lifting of lockdown restrictions.

Euro News: Single Currency Benefits from Strong Manufacturing Data

The Euro rose today following the publication of the latest Eurozone manufacturing PMI for May, which beat forecasts and rose to 63.1.

As a result, EUR investors have become more confident about the Eurozone’s economy as factory activity in the bloc hit a record high.

In addition, the consumer price index for May rose higher than forecast to 2%, exceeding the European Central Bank’s (ECB) target for the first time since 2018, and in turn supporting EUR exchange rates.

Coming up, German retail sales figures released tomorrow could limit the single currency as sales are forecast to have contracted in April.

US Dollar News: USD Slips as Safe-Haven Demand Dwindles

The US Dollar struggled at the end of last week following US President Joe Biden’s announcement of a $6 trillion budget proposal to help rebuild US infrastructure from the Covid-19 pandemic, which boosted risk appetite and weighed on the safe-haven ‘Greenback’.

USD exchange rates had made some fleeting gains after the PCE price index printed above forecast and indicated inflation soared to 3.1% in April.

However, the latest ISM manufacturing PMI has helped fuel more upbeat trade which has weighed on USD exchange rates.

If positive risk sentiment continues, the appeal of the safe-haven US Dollar could remain limited as European and Asian economies continue to recover from the coronavirus crisis.

Canadian Dollar News: Rising Oil Prices Drive Up CAD

The Canadian Dollar edged higher today as the demand outlook for oil has picked up, buoying the commodity-correlated ‘Loonie’.

The West Texas Intermediate crude rose by 0.9% and is trading around $66 a barrel, while Brent is trading near $70 a barrel.

This offset an unexpected Canadian first quarter GDP reading that indicated the Canadian economy had a slower than expected start to the year.

Australian Dollar News: ‘Aussie’ Dented by Dovish RBA

The Australian Dollar slipped following the Reserve Bank of Australia’s (RBA) latest policy meeting.

Although the RBA left interest rates on hold, the central bank reaffirmed its commitment to ultra-loose monetary until at least 2024, weakening AUD exchange rates.

Looking ahead, will a slowing of Australian GDP growth extend Australian Dollar losses?

Upcoming Data

Wednesday 2nd June

02:30 AUS GDP (Q1)

07:00 DE Retail Sales (Apr)

23:30 AUS AiG Performance of Construction Index (May)