Pound (GBP) undermined by contraction in UK services sector
The pound (GBP) was subdued through yesterday’s session after the UK’s latest PMIs reported the vital services sector contracted in May for the first time in a year.
The shock decline fed into speculation that the Bank of England (BoE) might hold off a little longer before tightening monetary policy again.
Expect the pound to remain on the defensive today after the UK reported a startling drop in retail sales in April.
Euro (EUR) slips as Eurozone outlook darkens
The euro (EUR) ticked lower on Thursday as the Eurozone’s latest PMIs showed the recent downturn in the bloc’s private sector deepened this month.
Adding to the pressure on the single currency were the latest economic forecasts from the European Commission, as it revised down its growth projections for the Eurozone to 0.9% in 2026.
Coming up, the euro risks falling further if Germany’s latest IFO business climate index reports morale in the Eurozone’s largest economy continued to deteriorate this month.
US dollar (USD) firms amid market caution
The US dollar (USD) gained ground against most of its peers yesterday as a cautious market mood saw investors favour the safe-haven currency.
USD demand was also supported by the latest US S&P PMIs, which reported the US private sector continued to expand this month, thanks to a surprise acceleration of growth in manufacturing.
In the absence of any impactful US economic indicators, the US dollar may continue to be influenced primarily by market sentiment, potentially extending its gains if the mood remains broadly downbeat.
Canadian dollar (CAD) muted despite rising oil prices
The Canadian dollar (CAD) struggled to attract support on Thursday, with the currency seemingly unable to benefit from its correlation with oil prices.
Canada will also publish its latest retail sales data later today, with April’s figures potentially lifting the ‘loonie’ if they point to continued resilience in consumer spending.
Australian dollar (AUD) pressured by dovish RBA bets
The Australian dollar (AUD) ticked lower overnight on Thursday as AUD investors continued to reprice their expectations for Reserve Bank of Australia (RBA) monetary policy in the wake of yesterday’s disappointing jobs data.
New Zealand dollar (NZD) losses tempered by robust retail sales data
A cautious market mood applied pressure to the New Zealand dollar (NZD) overnight, with these losses being tempered by stronger-than-expected domestic retail sales figures.
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