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Sterling made up some ground on the euro and climbed higher against the US dollar on Monday.
The pound made a strong start to the week, pairing a rise of three-quarters of a cent over the euro with a similar performance against the US dollar. For those still keeping score, GBP/USD is now around five cents stronger than where it began April.
Monday was a tentative day in markets that sought clarity on a number of issues. The first was this week’s GDP and inflation bonanza, which ramps up from today. The second was the odd issue of gauging just how intensely the US and China had been discussing a trade deal.
US treasury secretary Scott Bessent took to the airwaves to stress that all departments of the American administration were in contact with their Chinese counterparts. Bessent then put the ball back into China’s court, arguing that it was Beijing’s responsibility to de-escalate.
This morning, we learned that German consumer confidence increased by more than expected in the influential GfK survey. May’s preliminary figure came in at -20.6, several points above April’s score and defying predictions that it could plunge further.
The Iberian peninsula was hit by a massive blackout on Monday, bringing businesses, transport and schools in Spain and Portugal to a grinding halt. The power remained off well into the day, shutting down nuclear power stations in the process. While indicating it did not believe this was a cyber attack, the Spanish government insisted that “nothing is off the table”.
Mark Carney’s Liberal party was victorious in the Canadian elections, capping a wild turnaround for the party that was in many ways fueled by anti-Donald Trump sentiment. In an election overshadowed by sovereignty and the United States, the US president yesterday called on all Canadians to write in “the 51st state” on their ballot papers.
An alleged recent cyber attack on British retail giant Marks & Spencer has knocked £700mn off its valuation. After Friday’s breach, M&S was still facing disruption to online orders and has paused click-and-collect store orders.
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GBP: Below the radar
Sterling’s quiet advances have seen it make up ground against both the euro and the US dollar over the past week. With attention likely to be trained elsewhere this week, there is a chance the pound could pick up again. Equally, strong showings in European and American data would give sterling little in the way of convincing data to fall back on.
GBP/USD: the past year
EUR: Modest growth
The euro’s fortunes will likely be dictated by growth data this week. European Central Bank Vice President Luis de Guindos didn’t exactly calm any nerves yesterday when he relayed to lawmakers that the figures would be “modest”. With uncertainty high, “consumers may become cautious about the future and hold back spending”, de Guindos said.
GBP/EUR: the past year
USD: Data and tariffs weigh heavy
From the euro to the Japanese yen, the US dollar fell against the majority of the world’s major currencies yesterday. The ongoing trade war is one source of this weakness, but the onslaught of key data is also prompting investors to play it safe.
EUR/USD: the past year
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