Pound (GBP) lifted by European optimism
The pound (GBP) trended broadly higher through yesterday’s session as the currency was underpinned by a general sense of optimism in Europe.
The upside in GBP exchange rates was also supported by the UK’s latest manufacturing PMI, after February’s finalised index was revised slightly higher.
In the absence of any notable UK economic releases, the direction of the pound is likely to be determined by wider market trends today. If investors remain optimistic over Ukraine, Sterling may continue to strengthen.
Euro (EUR) strengthens on hopes for Ukrainian peace plan
The euro (EUR) got off to a strong start this week amid the optimism surrounding the Ukrainian peace plan put forward by European leaders over the weekend.
Reinforcing these gains was the publication of the Eurozone’s latest consumer price index, which reported Eurozone inflation cooled at a slower pace than forecast last month.
The Eurozone will publish its latest jobs figures later today, with the single currency potentially facing some headwinds if unemployment ticked higher again in January.
US dollar (USD) pressured as investors look to Europe
The US dollar (USD) weakened on Monday as investors focused on European assets amid hopes for a Ukrainian peace deal.
Adding to the pressure on USD exchange rates yesterday was the latest ISM manufacturing PMI, which reported US factory sector growth came close to stalling last month.
Looking ahead, risk-off flows may help to underpin the US dollar today, although US growth concerns may ultimately cap these gains.
Canadian dollar (CAD) tumbles as US tariffs come into effect
The Canadian dollar (CAD) was subdued through Monday’s European trading session amid quiet confidence from most investors that another last-minute deal would be found to avert US tariffs on Canadian exports.
However, it appears this confidence may have been misplaced, with the ‘loonie’ now facing significant headwinds after these tariffs came into effect overnight.
Australian dollar (AUD) losses tempered by RBA minutes
The Australian dollar (AUD) came under pressure overnight amid the growing risk of a global trade war. Although the minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting helped to limit these losses as they highlighted policymakers’ cautious outlook regarding further interest rate cuts.
New Zealand dollar (NZD) undermined by trade war jitters
The New Zealand dollar (NZD) also faced headwinds in overnight trade as market risk appetite was undermined as the latest US tariffs came into effect.
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