After seeing gains for the past two days, the pound is little changed against the dollar this morning. The Japanese yen, a safe haven currency investors tend to buy when risk-aversion sentiment rises, is also steady this morning as markets take on a wait-and-see approach. Meanwhile, UK consumer confidence has dropped, falling to the lowest level in more than two years. The survey, conducted by YouGov and the Center for Economics and Business Research, shows a pessimistic outlook for Britain’s economic situation. Confidence levels in the UK may fall further as the consequences of Brexit continue to kick in.
The euro, which also saw gains the previous two days, has started off this morning weaker. Consumer prices rose for the first time since January, showing that stimulus plans by the European Central Bank have had some positive impact on the region. But the pick-up is still slow and inflation goals may take even longer to achieve because of the Brexit referendum. ECB President Mario Draghi told European leaders in Brussels that output could drop 0.5% below forecasts over the next three years. Predictions of slower growth have weakened the euro against the dollar this morning.
Overall, a cautious note is hanging over financial markets. Global stocks and commodities are eking out gains today. The European stock market is higher for a third day, but has recovered only about half of its losses since Britain’s referendum due to continuing political upheaval in the UK.
EURUSD: Euro weakens after Draghi warns of slow growth.
GBPUSD: Sterling little changed against the dollar as UK’s political turmoil leads to stalling decisions on relationship with EU.
AUDUSD: Aussie dollar weakens after two days of gains as global investor sentiment turns cautious.
USDCAD: Canadian loonie pares some of its two-day gains this morning as oil rally halts.