[vc_row][vc_column][vc_column_text]A modest improvement in the UK’s May PMIs was not enough to offer the pound any significant boost against its rivals in the face of fresh speculation over the Bank of England’s (BoE) policy outlook.

Meanwhile, the mood towards the euro soured as the European Central Bank (ECB) signalled its willingness to implement further monetary loosening in June.

As relations between the US and China continued to deteriorate the US dollar benefitted from a general sense of market risk aversion, in spite of underwhelming domestic data.

Mounting worries over the global trade outlook weighed on the Australian dollar, especially in the wake of an unexpected deterioration in May’s Australian manufacturing PMI.

The pound came under renewed pressure against its rivals as Bank of England (BoE) Governor Andrew Bailey refused to rule out the possibility of negative interest rates.

Although Bailey also indicated that negative interest rates are not an immediate possibility, it failed to offer investors sufficient reassurance to boost the pound.

While May’s UK manufacturing and services PMIs picked up from the lows seen in April, they still represented a month of significant slowdown for the economy.

Coupled with April’s record jump in government borrowing, this painted a less-than-encouraging picture of the economic outlook which kept the pound under pressure ahead of the weekend.

With a lack of UK data released this week, the potential for GBP exchange rate gains look muted.

The UK government’s announcement of reopening non-essential shops gave the pound some support as market sentiment was boosted at lockdown restrictions beginning to ease.

However, concerns still linger over Brexit trade negotiations in June and possible negative interest rates, which look likely to hang over the pound and prevent significant gains.

Euro softens – June ECB policy action

The release of the European Central Bank’s (ECB) most recent set of meeting minutes put a dampener on the euro as the chances of further policy action picked up sharply.

The single currency was left on the back foot against its rivals as policymakers signalled a willingness to loosen monetary policy further in June.

Even though May’s Eurozone services PMIs saw a solid rebound from the previous month’s dismal performance, this was not enough to offer EUR exchange rates any particular boost.

The relative strength of the US dollar also limited the appeal of the euro, thanks to the negative correlation of the EUR/USD exchange rate.

Fresh commentary from ECB policymakers could put additional pressure on the single currency in the days ahead if signs continue to point towards a dovish move.

May’s Eurozone business confidence index may drive some additional volatility for EUR exchange rates as markets look for signs of improvement.

Unless business and consumer sentiment show signs of picking up in the face of easing lockdown conditions, the mood towards the euro could remain bearish.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]To request an instant quotation on a currency quotation please click here

* Information courtesy of Currencies Direct
Currencies Direct is one of Europe’s leading non-bank providers of currency exchange and international payment services. Since we were formed in 1996, we’ve maintained our focus on providing innovative foreign exchange and international currency transfer services to corporations of all sizes, online sellers and private individuals. We have also expanded our services to provide dynamic and pioneering “business to business” solutions to help companies, tier 2/3 banks and other non-bank financial institutions to process their international payments. Our headquarters are in the City of London (United Kingdom) and we have operations in continental Europe, Africa, Asia, and the United States. Currencies Direct is jointly owned by private equity firms Palamon Capital Partners and Corsair Capital.[/vc_column_text][/vc_column][/vc_row]