The pound plunged last week amid turmoil at the top of the UK government, with the ruling Labour Party facing a leadership crisis. Ongoing political uncertainty could continue to weigh on Sterling this week, while some high-impact UK data could infuse GBP with further volatility.
Last week's key rate movements
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GBP/EUR – Down 0.9% on the week
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GBP/USD – Down 2.2% on the week
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EUR/USD – Down 1.3% on the week
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AUD/USD – Down 1.3% on the week
Pound (GBP)
While there are plenty of UK economic data releases for GBP investors to sink their teeth into this week, they risk being overshadowed again by UK political developments, with the pound (GBP) likely to extend its recent losses if Keir Starmer’s position as Prime Minister remains under threat.
Euro (EUR)
The publication of the Eurozone’s latest PMIs will be the primary focus for EUR investors this week, with the euro (EUR) poised to fall if May’s preliminary figures report another contraction in private sector activity in the bloc.
US dollar (USD)
The minutes from the Federal Reserve’s latest policy meeting may act as a key catalyst for the US dollar (USD) this week, as markets look for fresh clues over the central bank’s policy outlook. A hawkish consensus could drive fresh gains for the ‘greenback’.
Australian dollar (AUD)
The Australian dollar (AUD) could attract support this week, if signs of resilience in the Australian labour market reinforce Reserve Bank of Australia (RBA) interest rate hike expectations.
South African rand (ZAR)
South Africa will publish its latest consumer price index this week, with an expected surge in inflation potentially lifting the South African rand (ZAR) if it boosts bets on an interest rate hike from the South African Reserve Bank (SARB).
Canadian dollar (CAD)
The Canadian dollar (CAD) could strengthen through the first half of this week if Canada’s latest consumer price index reports an acceleration in inflation, as this would likely reinforce expectations that the Bank of Canada (BoC) will keep interest rates higher for longer, or even consider tightening policy later in the year.
New Zealand dollar (NZD)
The New Zealand dollar (NZD) may come under pressure later this week as New Zealand’s latest retail sales data is expected to report a softening of consumer spending in the first quarter of the year.
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