The US dollar opened the week with a strong showing, helped first by another stumbling block to peace in the Middle East before it was given a further boost by some strong data from the American manufacturing segment.
Sterling struggled to replicate its success over other rivals against the US dollar. Iran’s declaration that it would not sit down for more talks until Israel halted its incursions into Lebanon prevented the pound from making further inroads, although it remains close to its strongest in a month against both the euro and the US dollar.
Donald Trump did succeed in cooling the situation a little. After a call with Benjamin Netanyahu, President Trump claimed that Israel and Hezbollah had agreed to cease hostilities and that a deal with Iran was still close. The closely watched brent crude oil index ticked up slightly to $94 per barrel on Monday.
There wasn’t too much in the way of economic data to focus on yesterday. The only real news of note was the ISM’s US manufacturing PMI, with May’s report exceeding expectations to hit highs not seen in four years.
Downing Street had been bracing itself for another embarrassing revelation regarding Peter Mandelson’s appointment as ambassador to the United States. Yesterday’s batch of documents revealed startling procedural breeches as well as internal dissent over Keir Starmer’s approach to government.
Ahead of the tenth anniversary of Britain’s vote to leave the European Union (EU), Treasury minister Lord Spencer Livermore claimed that rejoining was ultimately inevitable. Livermore gave his “personal view” in the House of Lords yesterday as Wes Streeting and Andy Burnham, the two frontrunners in a potential Labour leadership clash, both indicated they would like to rejoin the EU at some point.
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GBP: Bailey fails to quell hike momentum
Bank of England governor Andrew Bailey indicated on Friday that he doesn’t believe policymakers will be in any rush to raise interest rates. But with the energy crisis squeezing consumer finances and the scars of the 2022 crisis fresh in the minds of many, the pound is benefitting from the suggestion that every passing day without peace makes higher rates more likely.GBP/USD: the past year
EUR: Eyes on inflation
Several of the eurozone’s largest economies reported inflation data in the tail end of last week, but it is the combined read that will provide the clearest sight of the path ahead for the European Central Bank (ECB). Economists believe headline consumer price inflation may have hit 3.4% last month. Expect a euro rally if that is the result of this morning’s announcement.GBP/EUR: the past year
USD: Riding high
Strong economic data and more diplomatic struggles gave the US dollar a leg up on Monday. The US dollar’s path will depend heavily on how far apart the United States and Iran are with regard to their negotiating positions, having until recently appeared close to striking some kind of a deal.USD/GBP: the past year
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