Appetite for the pound continued to dwindle amid the battle to succeed Theresa May as Prime Minister. With most candidates vying for a harder line on Brexit, traders continue to worry about the future of the pound. Sterling dropped 3% against the euro last month, making it the worst performance against the single currency in 2 years.
Over the weekend the number of Conservative leadership hopefuls rose to 13, the elections will be held across the month of July and Boris Johnson remains the frontrunner, he has stated that come 31st of October the UK will leave the EU, deal or no deal.
Meanwhile Donald Trump begins his 3-day state visit to the UK this morning, shortly before departing the US he said Boris Johnson would be a good candidate for Prime Minister and that Brexit Party leader Nigel Farage should be included on Brexit negotiations.
GBPUSD opened at 1.2620 and dropped during the morning to a near 6-month low of 1.2557 before recovering in the afternoon as the US dollar hit headwinds of its own to close at 1.2628
GBPEUR opened at 1.1325 and similarly fell to a near 5-month low of 1.1274 before climbing back to close at 1.1315
The US dollar suffered against its safe-haven rivals on Friday as President Donald Trump threatened imposing tariffs on Mexico, stoking fears of a recession. His threat came on the back of what he calls a “surge of illegal immigrants” across the US southern border, causing the Mexican peso to fall 3.4% against the dollar. Dollar losses were also compounded by US Federal Reserve Vice Chair discussing the possibility of cutting interest rates should the US economy take a turn for the worse. The dollar index was on track for a 0.4% gain for the month.
Although there have been several safe-haven currencies amid the global trade conflict, the Japanese yen has continued to prove the strongest in 2019. The Swiss franc has also gained from safe-haven buying, gaining 0.69% on Friday however this was dwarfed by the yen’s gain of 2.72% against the dollar and 3.15% against the euro. The escalating trade war between the US and China is beginning to have a visible effect on economic data such as Chinese manufacturing activity.
EURUSD opened at 1.1144 and rose across the day, with a brief dip in the late afternoon, to close at 1.1161