The dollar saw multiple dips on Monday. At one point, getting as low as $1.35 to the pound, close to a three-year low. With a major US data release coming this afternoon, USD may tumble even further. Meanwhile, the euro continued its momentum, gaining 0.2% on the pound yesterday, and nearly 0.7% in the past week.
Monday brought news that UK house prices climbed 0.5% in the past month, nearly reversing last month’s slowdown – caused by the quiet following the rush of sales in April ahead of the increase in stamp duty. Looking longer term, house prices are up 3.5% since this time last year. Both increases are ahead of forecasts.
The US had a difficult Monday, with hits from President Donald Trump’s on-again, off-again tariff policy landing in multiple sectors.
Over the weekend Trump announced plans to double steel tariffs to 50%, reigniting worries for the industry globally. Then China said the US had “seriously violated” the trade truce struck last month; stoking fears the countries could return to their more than 100% reciprocal tariffs. The final body blow came from the US’s manufacturing figures, which revealed an industry contraction, when analysts were forecasting a small expansion.
This continued decline in US fortunes looks to be driving traders toward other currencies, as the dollar almost hit a three-year low against the pound on Monday and dropped over 0.5% against a basket of other currencies.
There are numerous significant data releases coming from the US this week, which could hobble the dollar further. This evening, the US Bureau of Labor Statistics will publish the number of job openings in the past month. Wednesday brings data on the state of the US services industry. Finally, Friday brings fresh employment and unemployment figures.
The euro climbed against the pound and dollar on Monday, gaining 0.2% against both currencies. Later this morning, inflation data will reveal whether the eurozone has managed to bring inflation down to its target of 2%. Then, on Thursday, the European Central Bank will reveal its latest interest rate decision, which is predicted to be a 0.25% cut to 2.15%.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 7898 0541 to get started.
