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EUR/USD sinks following sharp rise in US Treasury yields

currency-newsEUR/USD sinks following sharp rise in US Treasury yields
The US dollar rallied on Friday, rising in step with US Treasury yields which leapt over 1%.

Meanwhile, the pound is struggling to attract support so far this morning, with GBP/EUR flat at €1.1654 and GBP/USD subdued at $1.4098. GBP/CAD is rangebound at C$1.7142, while GBP/AUD and GBP/NZD hold steady at AU$1.8298 and NZ$1.9563 respectively.

Coming up, will we see the announcement of a delay to the UK’s final reopening date trigger a slump in Sterling today?

What’s been happening?

The US dollar closed last week’s session on a high, with the ‘greenback’ accelerating against the majority of its peers, in response to a more-than 1% appreciation in US Treasury yields.

Reinforcing the uptick in USD exchange rates was a better-than-expected reading in the University of Michigan’s latest consumer sentiment index.

Friday’s jump in the US dollar came at the expense of the Euro, with the negative correlation between the pairing leaving the single currency on the defensive throughout the session.

This drop in EUR exchange rates also came in spite of Germany’s Bundesbank upgrading its domestic growth expectations in its semi-annual forecasts.

The pound, meanwhile, also struggled at the end of last week’s session, amidst considerable speculation that the UK government will need to alter its roadmap for easing lockdown measures.

This offset the publication of the UK’s latest GDP figures, which reported that the country’s economic recovery continued to accelerate in April.

What’s coming up?

Turning to this week’s session, the primary focus for GBP investors will be on Boris Johnson’s coronavirus press conference later this evening, in which the PM will announce whether or not the 21 June reopening will go ahead.

This could see the pound face an uphill battle at the start of the session as the government is widely expected to announce a four-week delay to the next stage of lockdown easing.

On the other side of the Channel, the release of the Eurozone’s latest industrial production figures could provide a boost to the euro this morning, if factory output in the bloc accelerated as expected in April.

Meanwhile, the Federal Reserve will hold its June policy meeting this week, with the US dollar poised to weaken if the US central bank reiterates its desire to leave its monetary policy on hold for the foreseeable future.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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