Pound (GBP) slides as Starmer’s future remains under threat
The pound (GBP) found itself on the back foot yesterday as a growing number of MPs called on Prime Minister Keir Starmer to resign.
Although GBP stabilised briefly after Starmer told his cabinet he would not step down, Sterling faced further losses as four ministers resigned from government in protest.
Today, the pound has stabilised as Starmer seems to have survived, but bond markets remain on edge. Later in the session, a speech from Bank of England (BoE) policymaker Catherine Mann could affect GBP, with any hints of an interest rate hike potentially lending Sterling support.
Euro (EUR) falters amid stronger USD
The euro (EUR) came under pressure from its negative correlation with the US dollar (USD) yesterday, as the latter caught bids.
However, EUR was spared more notable losses thanks to better-than-expected German data. The country’s ZEW economic sentiment indicator unexpectedly improved in May.
Looking forward, a forecast slowdown in Eurozone industrial production in March could place modest pressure on EUR exchange rates today.
US dollar (USD) firms amid Fed rate hike bets
The US dollar rose yesterday, with the safe-haven currency initially buoyed by a risk-off market mood after President Donald Trump said the US-Iran ceasefire was on ‘massive life support’.
The ‘greenback’ continued to enjoy support later in the session thanks to the latest US consumer price index. With inflation rising from 3.3% to 3.8% in April, markets increased their bets on a Federal Reserve interest rate hike this year.
Today brings the release of the US producer price index for April. If we see a similar rise in factory gate inflation, USD could extend its upside.
Canadian dollar (CAD) ticks higher as oil prices rise
The crude-linked Canadian dollar (CAD) firmed yesterday as rising oil prices underpinned the currency.
Oil price dynamics are likely to remain the key catalyst for CAD movement today, with the ‘loonie’ poised to climb higher if crude remains elevated.
Australian dollar (AUD) holds ground amid risk-on mood
The Australian dollar (AUD) held steady overnight, having strengthened yesterday evening, as a risk-on mood in Asian markets kept the ‘Aussie’ afloat.
New Zealand dollar (NZD) dips amid domestic economic concerns
The New Zealand dollar (NZD) fell overnight, despite a survey by the Reserve Bank of New Zealand (RBNZ) showing that business inflation expectations rose in Q2, as the survey also pointed to higher unemployment and weaker growth.
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