Pound Dips on Weaker Economic Outlook; Leadership Contest Eyed

GBP

The British pound finished lower against major rivals on disappointing economic data. The British economy contracted by 0.4% month on month, the worst since February 2019. Moreover, the Industrial Production and Manufacturing Production dropped by 2.7% and 3.9%, respectively, in April. Investors will be looking for the Average Earnings Index in today's economic data, where a rise could support the Bank of England in raising interest rates. On the other hand, the race to replace Theresa May officially began, and the first voting round will be taking place on Thursday. The GBPUSD traded near a one-week low of $1.2654, and the EURGBP soared to a fresh five-month high of 0.8929.

USD

The dollar index which measures the greenback against a basket of major currencies held steady near a two-and-a-half month low at 96.78. The migration deal between the United States and Mexico drove US Treasury yields higher and reduced the stretched probability of interest rate cuts by the Federal Reserve. However, market participants await a series of economic data throughout the week to have a final hint on the performance of the US economy ahead of next week's FOMC meeting. The US 10-year yields rose to 2.157%, the highest in June, while the USDJPY hovered near 108.60.

Metals

Precious metal prices traded near the lows as the US Treasury yields inched higher. The price of a gold ounce drifted lower towards $1325, the silver ounce dipped to $14.63, while palladium rose to a six-week high of $1395.

Oil

Oil prices ended a choppy trading day on a slightly weaker note. There are several factors affecting the oil market, among them: the US sanctions on Iran and Venezuela, the trade tensions between China and the United States which could hit the global economic growth, the increased chances of an extension for OPEC+ supply cut till year end. During the Asian session, the West Texas Intermediate crude futures rose to $53.80, and Brent futures hovered near $62.60.

Major Economic Events

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