Pound (GBP) mixed as markets digest UK PMI
The pound (GBP) traded without a clear direction yesterday amid a mixed response to the UK’s final services PMI for May.
Although the PMI was revised higher, printing at 49.3 rather than 47.9, this still represented the first contraction in activity since April 2025.
This afternoon, Bank of England (BoE) Governor Andrew Bailey is set to deliver a speech. If he reiterates that he’s willing to temporarily tolerate above-target inflation to protect the UK economy, Sterling may face headwinds.
Euro (EUR) subdued following PMI results
The euro (EUR) was similarly uncertain on Wednesday, as the final Eurozone PMI was also revised higher but still pointed to a downturn in activity.
Stronger-than-forecast Eurozone producer price inflation offered little support to EUR, with the common currency also facing pressure from its negative correlation with the rising US dollar (USD).
A speech from European Central Bank (ECB) President Christine Lagarde could support EUR today, if she hints at the need for interest rate hikes. However, the euro could stumble later if the Eurozone’s latest retail sales figures reveal a fourth consecutive month of contraction in April.
US dollar (USD) rises amid risk-off mood and strong data
The US dollar marched higher yesterday, with the safe-haven ‘greenback’ initially drawing support from a risk-off market mood.
USD extended these gains thanks to strong US economic releases. New jobs data pointed to a healthy rise in employment last month, while the ISM services PMI reported a faster-than-forecast acceleration in activity.
Aside from the latest US initial jobless claims figure, market risk appetite may be the defining factor for USD today. If the mood remains downbeat, the ‘greenback’ could climb.
Canadian dollar (CAD) flat despite rising oil and positive data
The Canadian dollar (CAD) traded mostly sideways yesterday, with the crude-linked currency struggling to make gains despite rising oil prices and a better-than-forecast domestic services PMI.
With Canadian data thin on the ground today, oil price dynamics may drive CAD. If oil extends its upside, the ‘loonie’ may be able to push higher.
Australian dollar (AUD) dips in risk-off trade
The Australian dollar (AUD) initially softened overnight amid a risk-off market mood. However, the currency managed to recoup some losses this morning after Reserve Bank of Australia (RBA) Governor Michele Bullock delivered a speech that struck a balanced tone.
New Zealand dollar (NZD) subdued amid market anxiety
The New Zealand dollar (NZD) touched one-week lows overnight amid the gloomy mood, before rebounding from its worst levels and moving sideways overall.
Never miss a movement. Create a free account with Currencies Direct to get the latest currency news delivered straight to your inbox. You can also set up rate alerts and check live rates 24/7.
