The pound is dented by the electoral tremors
The pound was initially higher on Tuesday, with the currency gaining support after the latest UK Manufacturing PMI surpassed expectations in April.
However, sterling failed to consolidate this gain as concerns about the upcoming parliamentary elections in Scotland weighed on the sterling exchange rate in the second half of the session.
Looking ahead, any movement in the pound today could remain limited as sterling investors are likely to be reluctant to make any aggressive bets ahead of tomorrow’s Bank of England (Bank of England) interest rate decisions and elections in Scotland.
The euro is undermined by the strength of the dollar
Yesterday, the euro was mostly muted amid a lack of important data on the euro.
Instead, the single currency was driven by its negative correlation with the US dollar (USD), which caused it to become defensive as the latter strengthened.
In the near future, euro investors will expect a new boost from the eurozone services PMI this morning.
US dollar boosted by demand for safe havens
The US dollar rallied sharply in yesterday’s European trading session, as the downturn in equity markets triggered a risk-aversion addiction that reinforced the safe dollar.
This upside potential for the US dollar was further supported by growing hopes for a relatively quick recovery in the US economy this year.
This optimism could be further bolstered by the latest non-manufacturing PMI from ISM released this afternoon, with the US dollar exchange rate likely to accelerate even faster if the US services sector reports continued gains in April after a record gain in March.
Canadian dollar muted despite high oil prices
The loonie struggled to find support on Tuesday as the oil-sensitive loonie failed to rally amid rising WTI oil prices amid growing concerns over a third wave of coronavirus cases in Canada.
Australian dollar fluctuates amid mixed risk sentiment
The Aussie traded in a wide range the day before on Tuesday, with the Aussie gaining first on a moderate improvement in risk sentiment and then retreating quickly again as the US dollar began to strengthen again.
New Zealand dollar supported by unemployment reduction
The New Zealand dollar gained momentum in one-day trading in response to the latest New Zealand employment data, which reported an unexpected drop in unemployment in the first quarter of 2021.
09:00 PMI Service Sector Index, Euro (Apr)
13:15 Change in ADP Employment in USD (Apr)
15:00 USD ISM Non-Manufacturing PMI (Apr)