The British Pound (GBP) concluded last week on a downbeat note due to a significant contraction in the U.K.’s service sector, which accounts for over 70% of the country’s GDP, according to recent surveys. The downturn has heightened recession fears and led to speculations that the Bank of England (BoE) may have ended its cycle of interest rate increases.
The Confederation of British Industry’s (CBI) distributive trades survey could potentially exacerbate the situation for GBP. If it reveals continued weakness in the U.K.’s retail sector, it might amplify concerns about the overall economic health of the country.
On Monday, the Euro (EUR) experienced unstable trading, with its value fluctuating widely against other currencies following the release of the latest PMI surveys. The manufacturing sector underperformed, while the service sector’s performance was better than expected but still indicated a contraction. A potential decline in German business morale could impact the EUR today, along with potential influence from a speech by European Central Bank (ECB) President Christine Lagarde.
The U.S. Dollar (USD) also faced instability on Monday due to fluctuating market sentiment causing volatility in the ‘Greenback’. This uncertainty was partially due to mixed results from U.S. PMIs, with manufacturing exceeding expectations but service sector activity falling short. Market risk appetite could affect USD’s movement today. Additionally, a speech from Federal Reserve hawk Neel Kashkari later today may bolster USD.
Meanwhile, the Canadian Dollar (CAD) initially increased on Friday because of rising oil prices but pulled back during the latter half of the session as oil prices fell and Canadian retail sales failed to meet expectations. With scant CAD data available today, oil price trends may continue to sway CAD.
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