USD stays strong as Boris wobbles
Yesterday the euro remained on the defensive as investors pared back their expectations for higher ECB interest rates in 2023 – falling by circa 0.4% versus sterling and the dollar. EUR/USD fell to a new low of $1.016 in the process, before regaining some ground overnight. USD remained in the ascendancy once again. The dollar-index (a measure of the currency’s value versus a number of peers) broke above 107 yesterday, for the time since May 2002. However, despite some hawkish rhetoric in the latest Fed FOMC meeting minutes, which were released after the close in Europe, the greenback gave back some of its gains overnight.
As we get underway this morning, the firmer tone to the dollar and the weaker euro is evidenced by EUR/USD opening below the $1.02 threshold. EUR/GBP is operating back below the midpoint of 85-86p. GBP/ USD is changing hands around the halfway mark of $1.19-1.20.
As we look ahead to today, the main release of note will be the ECB monetary policy account for the June meeting. However, barring any major surprises, the euro is likely to remain under pressure, with a move towards parity against the dollar now very much within the realms of possibility. GBP will remain sensitive to political events in the UK as Boris sees the most resignations in one day than any other PM in history.