Pound (GBP) firms as Reeves’s position reassured
The pound (GBP) trended broadly higher at the start of this week, with the currency continuing to recover from last week’s selloff after Prime Minister Kier Starmer gave his full backing to Chancellor Rachel Reeves.
However, this recovery remained modest in scope amid concerns that the UK faces fiscal deficit risks, following the government’s welfare reform climbdown.
UK data remains in limited supply today, likely leaving GBP movement to be driven by wider market trends.
Euro (EUR) slips amid EU-US trade deal uncertainty
The euro (EUR) faced headwinds on Monday amid signs of division within the EU on the terms of the EU-US trade deal currently being negotiated.
This drop in the euro was reinforced by data showing that retail sales in the Eurozone suffered their steepest decline in almost two years in May.
Unsurprisingly, the focus for EUR investors is likely to remain on EU-US trade negotiations, with the euro poised to rally if a deal can be found that could win the backing of most EU members.
US dollar (USD) slides as Trump pushes back tariff deadline
The US dollar (USD) initially appreciated yesterday, with the currency benefitting from safe-haven flows and a recent trimming of Federal Reserve interest rate cut expectations.
However, USD demand then faltered as US President Donald Trump pushed back his tariff deadline again, this time to 1 August.
Turning to today’s session, we might see investors remain wary of the US dollar as they assess how the missing revenues from Trump’s latest tariff delay could place even more fiscal pressure on the US.
Canadian dollar (CAD) sidelined by slow progress in US-Canada trade talks
The Canadian dollar (CAD) ticked lower on Monday, amid concerns that US-Canada trade negotiations aren’t progressing as quickly as hoped.
Coming up, Canada’s latest Ivey PMI is likely to weigh on the ‘loonie’ today, if June’s index reports another contraction of economic activity.
Australian dollar (AUD) soars as RBA leaves rates on hold
The Australian dollar (AUD) jumped overnight on Monday after the Reserve Bank of Australia (RBA) surprised markets by leaving interest rates unchanged.
New Zealand dollar (NZD) buoyed by risk-on flows
The New Zealand dollar (NZD) also firmed in overnight trade as Trump’s latest tariff delay helped to revive market risk appetite.
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