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EUR/USD extends losses as Fed-fuelled US dollar rally continues

currency-newsEUR/USD extends losses as Fed-fuelled US dollar rally continues
The US dollar remained on the front foot on Thursday, as the currency continued to catch tailwinds from the Federal Reserve’s recent rate decision.
 
Meanwhile, the pound is trending lower this morning, with GBP/EUR and GBP/USD down slightly at €1.1651 and $1.3864. GBP/CAD is fluctuating around C$1.7152, GBP/AUD is holding AU$1.8411 and GBP/NZD is steady at NZ$1.9864.
 
The only data release of note today is the UK’s latest retail sales figures.
 

What’s been happening? 

The US dollar continued to press higher yesterday, with the currency continuing to benefit from the Fed’s surprisingly hawkish forward guidance issued following its latest policy meeting on Wednesday.
 
Expectations that the Fed could start to hike interest rates from 2023 saw USD bulls willing to overlook some lacklustre domestic data, with an unexpected rise in jobless claims and a weaker-than-expected Philadelphia manufacturing index failing to exert any downward pressure on the US dollar.
 
The uptick in the US dollar continued to exerted some notable pressure on the euro on Thursday as a result of the negative correlation in the pairing, while a slightly stronger-than-expected core CPI reading from the Eurozone failing to extend much support to the euro.
 
The pound, meanwhile, trended higher against most of its peers on Thursday. There didn’t appear to be any clear catalyst for the uptrend in Sterling and it came in spite of ongoing concern over the economic impact of delaying the UK’s final reopening by another four weeks.

 

What’s coming up? 

In the spotlight today we have the publication of the UK’s latest retail sales print.
 
The data revealed a slowing in retail sales growth in May, with sales in food stores taking a particular hit as consumers returned to hospitality venues as restrictions eased.
 
Demand for outdoor furniture did inspire an increase in sales at non-food shops however.
 
While the proportion of online sales declined as people returned to physical shops, the Office for National Statistics (ONS) said that they ‘remain nearly 60% higher than the level seen in February 2020’ (before the coronavirus pandemic took hold). 
 
Across the pond we may see the US dollar maintain its upward trajectory though to the end of the week as Fed rate hike expectations dominate headlines.
 
Should this uptrend in the ‘greenback’ remain in place it's likely the euro could remain on the defensive though today’s trading session.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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