The Pound (GBP) got off to a mixed start this week, rising against its more stable peers but beginning to slip against its high yield cousins as commodity prices rebounded.
Sterling was also weakened by a new report that suggested that UK workers will face a pay squeeze this year as average wage growth is expected to fall to a three-year low of 1%, well behind the current rate of inflation at 2.3%.
Investors are likely to focus on tomorrow’s CPI reading as they hope that a further rise in inflation will prompt the Bank of England to begin raising interest rates in order to prevent the pay gap from expanding further.
The Pound Euro (GBP EUR) exchange rate trended slightly higher this morning as markets await Emmanuel Macron’s first moves as French president after his inauguration on Sunday, with picking a new Prime Minister set to be at the top of his agenda.
Meanwhile a better than expected rise in Italy’s inflation rate helped the single currency slow Sterling’s advance as it climbed from 1.4% to 1.9% last month, outpacing expectations of a 0.4% rise.
However, a speech from the European Central Bank’s (ECB) Peter Praet could prompt a further fall in the Euro this afternoon if the policymaker presents another dovish outlook for the bank’s future monetary policy.
Sterling jumped nearly half a cent against the US Dollar (USD) this morning following some lacklustre data from the world’s largest economy last week.
The ‘Greenback’ was weakened further by another missile test by North Korea over the weekend, with fears that the action could lead to further geopolitical tensions between the US and Pyongyang.
Looking ahead, the US Dollar may find some strength this afternoon with the release of the latest Empire State Manufacturing Index, which is expected to show a rise from 5.2 to 8 in May.
The Pound Canadian Dollar (GBP CAD) tumbled this morning as the crude-correlated ‘Loonie’ was bolstered by the recent uptick in oil prices.
WTI Crude jumped over 1.5% to $48.58 a barrel earlier today as both Saudi Arabia and Russia signalled that they would support the extension of production cuts to at least the end of the year, increasing the chances that OPEC will come to an agreement to extend cuts past June.
Sterling also began to slip against the Australian Dollar (AUD) this morning following the announcement of China’s Belt and Road programme, with investors speculating that the “modern Silk Road” will help to increase Australia trade prospects.
New Zealand Dollar
The Pound also fell against the New Zealand Dollar (NZD) this morning following the release of New Zealand’s first quarter Retail Sales figures as they unexpectedly jumped from 0.9% to 1.5% at the start of the year.
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