Sterling continues to perform – Dollar sees resurgence over weekend

Sterling continues to perform

During May, sterling remained strong and was the only currency to outperform the USD. Opinion polls for the European Union referendum are now approaching 80 per cent for a ‘remain’ vote, which has revealed evidence of GBP shorts being covered. Last week, sterling continued to perform solidly, with the British pound to euro exchange rate peaking at it’s best conversion level seen since the beginning of February 2016.

Today’s trading session has so far seen the pound jump against the single currency, and in fact testing best conversion highs. This is an increase from bank holiday Monday’s session, which saw the pound and euro exchange rate edging lower.

Dollar sees resurgence over weekend

The US dollar saw a resurgence in strength over the weekend, which meant the currency pushed higher against rivals as investors continued to reassess the likelihood of an imminent Fed interest rate hike.

Meanwhile, the euro to US dollar exchange rate was prompted to trade low following strong US data and policy maker commentary, which highlighted the possibility of a move on interest rates in June.

After Friday’s revision to the first quarter US GDP, the appeal of the USD was enhanced. Such an improvement seemed to suggest that slowdown pressures had not impacted the world’s largest economy as much as what was feared by investors at the start of 2016, despite the figure still being weaker than what some had expected.

EUR/USD on back foot

Following the negative printing of the German Retail Sales figures today, investors find the euro to dollar exchange rate on the back foot. Unfortunately for the EU, this was despite stronger Spanish Retail Sales and French Consumer Confidence figures reaching their highest level since October 2007, which proved to not be enough to boost euro exchange rates ahead of the weekend.

As currency exchange markets resume this week, the EUR/GBP pair continue to climb as the sterling’s activity remains limited due the UK bank holiday.

Later today the eurozone’s inflation figures are due to be released, and as a result of this, further GBP/EUR movement is expected. Additionally and in spite of last week’s seemingly positive eurogroup meeting, it seems that Greece remains a prominent downside influence on the common euro currency.

Japanese economic data fails to extend any support to yen

The USD/JPY pair found fresh buyers at the Asian session, which boosted the pair’s exchange rate on Friday, however this soon retracted back and remained almost unchanged from Monday’s closing level.

Even better than predicted Japanese economic data failed to extend any support to the widely weakening yen. Elsewhere, even more promising data came in terms of industrial production data that printed a growth of 0.3% as compared to expectations of a contraction by 1.4%.