Pound (GBP) slides on UK-US trade deal doubts
The pound (GBP) faced headwinds at the start of this week, with GBP/EUR sliding to an eight-month low, amid suggestions that a UK-US trade agreement may prove more elusive than previously hoped.
Despite efforts to secure an exemption from the tariffs, it seems increasingly likely the UK government will now respond with its own tariffs, potentially escalating trade tensions and making a deal more challenging.
Looking ahead, Sterling sentiment is likely to remain downbeat so long as the feasibility of a UK-US trade deal remains in doubt.
Euro (EUR) bolstered by rebound in retail sales
The euro (EUR) accelerated on Monday, with the single currency attracting support from skittish investors.
This uptick in the single currency was further supported by a rebound in Eurozone retail sales, even if sales growth ultimately fell short of expectations.
Turning to today’s session, EUR investors may look to a speech by European Central Bank (ECB) Vice-President Luis de Guindos for fresh impetus. If he strikes a dovish tone in light of Trump’s tariffs, the euro may relinquish some of its recent gains.
US dollar (USD) supported by safe-haven flows
The US dollar (USD) traded positively against many of its peers yesterday as the ongoing rout in equity markets saw investors favour safe-haven assets.
However, the 'greenback’ struggled to replicate this success against other safe-haven currencies amid growing bets the US economy will slip into recession this year.
With the focus likely to remain on Trump’s tariffs, we could see this trend persist through today’s session.
Canadian dollar (CAD) softens as oil price selloff continues
The Canadian dollar (CAD) stumbled on Monday as the commodity-linked currency continued to be undermined by falling oil prices.
Expect this downtrend in the ‘loonie’ to persist today, so long as crude prices remain under pressure.
Australian dollar (AUD) rebounds in risk-positive trade
The Australian dollar (AUD) rallied overnight on Monday, with the currency lifted by a positive shift in risk appetite, despite Trump’s threat to raise tariffs against China by an additional 50%.
New Zealand dollar (NZD) strengthens amid improving mood
The New Zealand dollar (NZD) also strengthened in overnight trade amid the improvement in risk sentiment.
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