The Pound (GBP) found little in the way of lasting gains on Monday despite the DUP finally agreeing to a deal with the Tories after two weeks of negotiations.
While Theresa May will now have the support she needs to effectively rule in a minority government, markets remain wary of her position in the Conservative party, will many rumours still circling that she could be ousted as leader over the bungled general election.
Sterling may face further pressure later this morning with the release of the Bank of England’s (BoE) Financial Stability Report, with analysts predicting that the report will issue further warnings about a number of risks to the UK economy.
The Pound Euro (GBP EUR) exchange rate fluctuated quite wildly yesterday as markets reacted to the news that Italy would be bailing out two of its major banks.
Initial shock at the move caused investors to flee the single currency but the euro was able to recoup the majority of its losses by the afternoon on hopes that the rescue package would help to finally stabilise Italy’s banking sector.
Meanwhile, a speech by European Central Bank (ECB) President, Mario Draghi this morning breathed a little more life into the Euro as the recent uptick in Eurozone growth caused him to give a more upbeat outlook for the bloc’s economy.
Sterling trended higher against the US Dollar (USD) for much of Monday but fell again overnight as markets awaited a slew of central bank speeches on Tuesday.
Much of the ‘Greenback’s weakness yesterday came from a larger than expected decline in the latest US Durable Goods Orders figure, which slipped from -0.9% to -1.1% in May.
USD investors will be eagerly awaiting a speech by Federal Reserve chair, Janet Yellen in London later today, with sentiment in the US Dollar likely to be forged by the tone of her speech, especially in regards to future monetary policy.
Despite surging by around half a cent against the Canadian Dollar (CAD) yesterday the Pound struggled to stabilise as the ‘Loonie’ was strengthened by the continued recovery in oil prices, with crude markets rallying as Saudi Arabian crude export loadings dropped in April.
The Pound Australian Dollar (GBP AUD) exchange rate slumped by around half a cent in overnight trade on Monday as markets went increasingly risk-on ahead of a number of speeches from various central bank leaders.
New Zealand Dollar
The Pound also found itself tumbling against the New Zealand Dollar (NZD) this morning as rising risk sentiment caused investors to flock to the high-yield ‘Kiwi’.
This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.
Last update: 22 Feb, 2020
The strong start to the year for “risk-on” currencies is already a distant memory.
Posted: 3 Feb, 2020
The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.
Last update: 8 Jan, 2020