Euro Dominates As Sterling & Dollar Falter
The Euro yesterday attracted some strong buying interest ahead of the weekend and pushed the British Pound lower, a move that could potentially signal an end to Sterling’s advance against the Eurozone’s single currency.
The reason for its move lower, the conclusion of an 18 month strategy review to which the European Central Bank (ECB) announced they are now more tolerant of inflation levels being above 2.0%. The comments caused a flurry of Euro buyers with traders expecting the central bank to be more aggressive in their pursuit of higher inflation.
In level terms, the firmer tone to the Euro was reflected in EUR/USD moving higher within the 1.18- 1.19 region. GBP/EUR edged lower to 1.16 before slightly picking up overnight to trade around 1.1630 this morning whilst GBP/USD remains below the 1.38 handle.
Already this morning, UK GDP for May has printed below the consensus. GDP grew by just 0.8% in the month, Industrial production also rose by a modest 0.8% but the manufacturing component unexpectedly declined in May. However, the releases were not seen as impactful and thus have not moved Sterling’s position so far in early trading.
Friday: China CPI, PPI; UK GDP, trade balance, production; France industrial production; Canada employment.