Strongest Pound for Six Weeks
Sterling hit a six-week high against the Euro late last week as jitters ahead of the first round of the French presidential election. A week of upbeat data in the UK gave the British currency some respite from Brexit worries.
The Pound gained ground versus single currency late last week due to the rise of Jean-Luc Melenchon, a far-left candidate in the French presidential race, while steady inflation readings and forecast-beating wage growth numbers gave the Pound a lift. Sterling was up 0.2% at 84.87 pence per Euro, earlier touching 84.76 pence, its highest level since Feb. 27.
The Dollar pulled away from five-month lows versus the Japanese Yen in the overnight market last night, with comments from U.S. Treasury Secretary Steven Mnuchin and higher debt yields giving the dented greenback some space to breathe. Still, the Dollar was capped by nervousness surrounding economic dialogue between the United States and Japan.
Worries about North Korea and the coming French presidential elections also kept a lid on the Dollar against the safe-haven Yen. Mnuchin told the Financial Times that he agreed with U.S. President Donald Trump’s view that the Dollar’s strength in the short term was hurting exports, but that he saw the currency’s strength over the long term as a positive.
The shared currency wiped out weekend gains and trades muted against its American counterpart in Europe early this morning, keeping EURUSD capped below the midpoint of 1.06. Within Europe, holiday-mode trading is expected to wane, as Euro traders brace for the first round of the French elections scheduled this Sunday, in order to gauge the next direction for the shared currency.
France’s presidential race enters its final stretch with no clear winner in sight as the main contenders scrap for votes in a flurry of campaign rallies. Edouard Lecerf, Head of the political department at polling firm Kantar Sofres noted how ‘Everyone is petrified. The challenge for each of the four candidates is to seek new votes without alienating their base’. According to Elabe’s latest poll, support for Macron stands at 24%, while Le Pen is at 23%. Fillon holds 21%, followed by Melenchon at 18%.
Data to watch:
1:30pm USD Housing Starts Change (Mar), Building Permits Change (Mar), Building Permits (MoM) (Mar), Housing Starts (MoM) (Mar). 2:15pm USD Industrial Production (MoM) (Mar), Capacity Utilisation (Mar).