Shielded
GBP: The British Pound fell after UK GDP shrank 0.1% in May, following April’s 0.3% decline, defying expectations of growth. In fact, manufacturing and industrial output dropped sharply, while only modest services growth offered support. Moreover, mounting fears over the UK’s unsustainable debt and government spending added pressure. Ultimately, markets now expect interest rate cuts, further weighing on the Pound as confidence in the UK’s economic outlook deteriorates.
EUR: The Euro remained relatively steady despite market volatility, supported by hopes of a potential US-EU trade agreement. However, signs of easing German wholesale prices have increased speculation that the European Central Bank may cut interest rates, which could weaken the Euro. While global risk appetite dampened safe-haven demand, the Euro was shielded from losses by optimism over improving transatlantic trade relations and resilient Eurozone economic sentiment.
USD: The U.S. Dollar weakened amid improving market sentiment and dovish signals from the Federal Reserve. In fact, optimism following reduced trade tensions and expectations for a potential July interest rate cut pressured the Dollar. With no major domestic data released, the greenback moved in line with overall risk appetite. Moreover, any rise in U.S. jobless claims could further weigh on the Dollar in the short term, especially if economic uncertainty persists.
If you would like to discuss your exchange rates, have any questions about the market or would like to learn more about how we could help, please get in touch.
T: +44 203 440 7550 | E: info@spectrumfx.co.uk | W: www.spectrumfx.co.uk
