Pound (GBP) undermined by UK-US trade deal disappointment
The pound (GBP) slumped against the majority of its peers yesterday, amid dwindling optimism for a UK-US trade deal.
This followed reports that US President Donald Trump has made a trade deal with the UK a ‘second-order priority’ as Washington focuses on talks with Asian nations such as South Korea, India, and Japan.
The UK holds its local elections today. A lacklustre performance by Labour could prove negative for the pound if it raises concerns over the strength of the government.
Euro (EUR) supported by rise in Eurozone GDP
The euro (EUR) trended broadly higher on Wednesday as EUR investors welcomed the latest Eurozone GDP figures.
GDP surprised to the upside in the first quarter with a 0.4% acceleration, which helped to trim European Central Bank (ECB) interest rate cut expectations.
Turning to today’s session, movement in the euro is likely to be limited as EUR investors brace for the release of the Eurozone’s latest inflation figures on Friday.
US dollar (USD) firms despite US GDP contraction
The US dollar (USD) maintained a positive trajectory yesterday, despite a larger-than-expected contraction in US GDP in the first quarter.
While the contraction in growth came as a disappointment, USD sentiment appeared to be underpinned by hopes for more tariff concessions from Trump.
The release of the latest ISM manufacturing PMI is in focus today. If April’s index reports growth in the manufacturing sector continued to slump, it may apply some pressure on the ‘greenback’.
Canadian dollar (CAD) supported by positive GDP figures
The Canadian dollar (CAD) strengthened on Wednesday after Canada’s own GDP figures reported domestic growth unexpectedly accelerated in March, following a surprise contraction in February.
Looking ahead, movement in the ‘loonie’ may be tied to oil price dynamics through today’s session. If prices continue to soften, the Canadian dollar may be forced to relinquish some of Wednesday’s gains.
Australian dollar (AUD) bolstered by rebound in exports
A sharp rebound in Australian exports initially strengthened the Australian dollar (AUD) overnight on Wednesday, before a souring mood reversed the bulk of these gains by the start of the European trading session.
New Zealand dollar (NZD) pressured by risk-off flows
The New Zealand dollar (NZD) also gave ground towards the end of Thursday's Asian session amid a deterioration in market sentiment.
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