Pound Climbs ahead of NI Protocol Legislation Vote, US Dollar Falls amid Return of Risk Appetite

Pound (GBP) Trends Higher despite NI Protocol Tensions

The Pound (GBP) ticked higher against some of its rivals today. A return of risk appetite may have helped boost Sterling against some of its riskier competitors.

Brexit-related headwinds may have also capped Sterling’s gains today. The UK government has come under fresh criticism today ahead of the reading of its bill concerning the Northern Ireland Protocol. EU ambassadors have labelled the legislation ‘illegal and unrealistic’.

A speech from Bank of England (BoE) Governor Andrew Bailey on Wednesday is set to be keenly watched by investors for clues as to the central bank’s future actions. Any signals regarding rate hikes could cause movement in Sterling.

Euro (EUR) Bolstered by ECB Rate Hike Bets

The Euro (EUR) climbed higher against its rivals today. amid rate hike bets today. The single currency saw limited gains however, with investors awaiting a key speech from European Central Bank (ECB) President Christine Lagarde later in the day.

Concerns over the prospect of bond yield fragmentation may have limited gains for EUR, however. Analysts fear that the ECB could raise interest rates too aggressively and increase pressure on indebted Eurozone economies, pushing the trading bloc closer to a recession.

Looking to the week ahead for the Euro, the single currency could see movement after a speech by ECB President Christine Lagarde later today. Additionally, German inflation figures on Wednesday and Eurozone inflation figures on Friday could bolster EUR if they remain high as forecast.

US Dollar (USD) Slips amid Risk-On Mood

The US Dollar (USD) dipped against its competitors today amid a risk-on trading sentiment. The safe-haven ‘Greenback’ may have seen some support amid fears of a global economic slowdown, however.

The currency may have also suffered amid concerns that overly aggressive action from the Federal Reserve may push the US into an early recession. Multiple Fed policymakers have recently stated that 0.75% rate hikes are likely to be necessary, a stance that may have prevented major losses for the currency.

Wednesday’s speech from Fed Chair Jerome Powell could prompt movement in USD depending on his stance. Additionally, a predicted rise to the PCE Price Index on Thursday could bolster the US Dollar if figures print as forecast.

Australian Dollar (AUD) Drops as Chinese Economy Falters

The Australian Dollar (AUD) fell against its competitors today despite a risk-on trading sentiment. The riskier impulses helped to underpin the ‘Aussie’, although a drop to commodity prices likely pulled the currency lower. Additionally, a drop to Chinese industrial profits in May could have also contributed to the currency’s fall today.

Looking to the week ahead, the country’s latest manufacturing PMI could cause movement in AUD on Friday. Further movements in the price of iron ore could also prompt changes in the fortunes of the ‘Aussie’.

Canadian Dollar (CAD) Underpinned by Climbing Oil Prices

The Canadian Dollar (CAD) remained subdued against its competitors today. The commodity-tied ‘Loonie’ likely remained underpinned by bullish crude oil prices, however. The prospect of further sanctions against Russian gas and oil saw prices of the commodity climb higher amid supply concerns.

Looking ahead, a fall to GDP could pull CAD lower amid fears over the country’s economic recovery. Further changes in the price of oil could also prompt movement in the ‘Loonie’.