Bank of England Deputy Governor Dave Ramsden stated yesterday that there was a risk that demand could outstrip supply, pushing prices higher in the short term. He added that the bank “would not be complacent over prices”, alluding to a more hawkish (higher interest rates) policy stance over the next few months which pushed Sterling higher. The UK Manufacturing Purchasing Managers Index index was revised down to 65.6 from the preliminary reading. New orders increased and employment increased at the fastest pace on record. Costs and selling prices both increased at the fastest pace on record while capacity constraints also increased.
Sterling failed to maintain the head of steam and hit selling interest as it drew close to 3-year highs around 1.4250 to the Dollar. Sterling dipped to lows near 1.4150 late in the day while the Euro posted net gains to 1.1580.
The Pound opens near 1.4150 to the Dollar and 1.1580 to the Euro amid slightly more cautious risk conditions.
The dollar was unable to secure a significant recovery and tended to drift lower again into the New York open as markets monitored inflation developments.
The US currency stabilised later in the day with the Dollar settling around 1.2225 amid some reluctance to sell the dollar aggressively given Federal Reserve policy uncertainty. The dollar held a slightly firmer tone on Wednesday with the USD rate around 1.2215 as overall reflation traded faded to some extent.
The Euro stays mildly bid above 1.2210 against the Dollar heading into Wednesday’s trading session. The currency pair refreshed its weekly high yesterday, just to post the highest daily losses in over a week amid US Dollar moves and mixed catalysts at home.
ECB Governor Christine Lagarde speaks today with comments being watched for potential market movements.
Posted in Daily Market News on Jun 2 2021