Pound (GBP) supported by Starmer’s comments on EU alignment
The pound (GBP) attracted modest support through yesterday’s session in response to comments from Prime Minister Keir Starmer about pursuing closer trade relationships with the European Union.
Starmer’s remarks on aligning with the EU single market were welcomed by GBP investors who hope that closer trading relations with the continent will be positive for UK growth and investment.
The UK’s services PMI will be in focus for GBP investors today, with December’s finalised index potentially sapping Sterling sentiment if it echoes the manufacturing PMI and is revised lower.
Euro (EUR) slides amid Russia and Greenland concerns
The euro (EUR) weakened on Monday amid concerns over the potential implications that US intervention in Venezuela could have for Europe.
In addition to potentially emboldening Russia in Ukraine, it also made EUR investors view US President Donald Trump’s repeated comments regarding Greenland in a new light.
In the spotlight today is Germany’s consumer price index. December’s preliminary figures are forecast to report a deceleration in inflation and could keep the pressure on the single currency.
US dollar (USD) lifted by geopolitical uncertainty
The US dollar (USD) initially caught bids on Monday as the US strikes in Caracas and the capture of Venezuelan President Nicolás Maduro over the weekend underpinned safe-haven demand.
These gains were then reversed later in the session, after the latest ISM manufacturing PMI surprised to the downside and a Federal Reserve policymaker warned about potential unemployment risks.
Looking ahead, if the focus remains on Venezuela and the global ramifications of the US-led regime change, we may see investors continue to favour the safe-haven dollar.
Canadian dollar (CAD) undermined by Monroe Doctrine concerns
The Canadian dollar (CAD) weakened on Monday, with CAD investors unnerved by US regime change in Venezuela, as it revived concerns over Trump’s previous comments on Canada becoming the 51st state.
Looking ahead, the concerns may continue to influence the ‘loonie’ today, although a continued rise in oil prices could help to arrest further losses.
Australian dollar (AUD) rallies on RBA rate hike speculation
The Australian dollar (AUD) appreciated overnight on Monday amid a strengthening of bets that the Reserve Bank of Australia (RBA) will hike interest rates in the coming months.
New Zealand dollar (NZD) buoyed by rebound in risk sentiment
The New Zealand dollar (NZD) also strengthened in overnight trade as an improving market mood helped to underpin the risk-sensitive ‘kiwi’.
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