02/06 – Sterling pulls back from highs

Jeremy Thomson-Cook
Jeremy Thomson-Cook 02 June 2021

GBP: Variant concerns take sterling off the higs

EUR: No change given inflation move

USD: Trend remains lower USD

Sterling

While front pages will be focused on the UK reporting no deaths from Covid-19 yesterday, sterling instead had its hands full with concerns that new variants will delay the reopening of further parts of the UK economy on June 21st. This was felt more keenly in GBPEUR than in GBPUSD given the issues of trade and travel between the UK and Europe over the summer months and will likely be the focus for GBP movement on Covid in the coming weeks.

Euro

Despite a pickup in inflation in the Eurozone to 2% every man, woman and their dogs believe that the ECB is going to stay in its ultra-accommodative stance for a long time. That should be something that weakens the euro but as we have seen in the past 9 months or so, widening and deepening recovery prospects for both the Eurozone and global economies should support the single currency especially against the USD.

US dollar

Until Friday’s jobs data, the trend of wider USD weakness will largely persist. Today’s Beige Book announcement from the Federal Reserve will not move things too much although there are likely to be headlines focusing on latent inflation pressures which could offer some USD strength later in the session.

Elsewhere

Comments in Australia that the local government could press further World Trade Organisation actions against China over tariffs on wine has shaken commodity currencies overnight alongside oil price falls.

AUD is down 0.25% on the session so far.

Market rates

Today’s interbank rates at 08:11 against sterling. Movement vs yesterday.

Euro €1.159 ↓
US dollar $1.414 ↓
Australian dollar $1.829 ↓
South African rand R19.49 ↓
Japanese yen ¥155.2 ↓

Have a great day.