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Market Overview
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Markets opened the week on a cautious note, balancing geopolitical concerns with mixed economic data. While UK and Eurozone PMIs offered slight surprises, investor focus now shifts to U.S. data releases for clearer direction. Risk sentiment remains fragile, keeping FX moves relatively contained.
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GBP
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GBP found modest support this morning following a slight upside surprise in the UK’s latest PMI data, with manufacturing output outperforming expectations and services holding steady. While the figures weren’t overwhelmingly strong, they were enough to stabilize the pound amid lingering geopolitical uncertainty.
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USD
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Tensions escalated over the weekend following US military action targeting Iran’s nuclear infrastructure. Initially, this geopolitical flare-up sparked risk-off sentiment in global markets. Investors moved to safe havens, prompting a brief spike in USD and a dip in equity futures. However, as Monday trading unfolded, market behavior reversed course. Despite the lingering potential for Iranian retaliation, risk appetite returned with US equities advancing and the dollar stabilizing amid easing investor anxiety.
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EUR
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The EUR showed limited movement today, as Eurozone PMIs offered little momentum—manufacturing remained below the 50 threshold, while services activity managed to return to neutral territory. The data reinforced the region’s sluggish growth outlook, leaving the EUR vulnerable to pressure, especially against the dollar. With the ECB leaning dovish and global risk sentiment in flux, EUR may struggle for upside without a clearer recovery signal.
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CHF
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Gold and traditional safe havens such as the JPY and CHF saw initial buying interest as geopolitical uncertainty intensified. However, the reversal in sentiment has been swift and somewhat unexpected. Both gold and haven currencies lost ground through the morning session, as equity markets rebounded. The lack of follow-through may suggest traders are discounting a prolonged conflict scenario for now.
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This morning’s UK data offered a slight positive surprise, particularly in factory output, which outpaced forecasts and lent some early-day support to sterling.
In contrast, the US dollar, which had initially firmed on the back of weekend geopolitical headlines, has since eased. Whether it regains upward traction may depend on how this afternoon’s U.S. business activity indicators perform.
That said, broader market direction remains highly sensitive to geopolitical developments, and traders will be closely watching for any new events that could shift the tone across currency markets.
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HOW WE CAN HELP
Our experienced currency team is here to ensure you make the most of your international transfers. By gaining a clear understanding of your goals, we offer personalised support and recommend the most suitable strategies to help you navigate the currency market with confidence. Get in touch with Osman Hanif today on +44 (0) 20 3371 9200 or email osman@magnafinancial.com
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