Pound Dips after U.K Attacks, Dollar Steadies

The pound has dipped weaker in Asia as markets responded to the weekend attack happened in London that killed seven after a van mowed down pedestrians on London Bridge and attackers went out and started stabbing people at nearby restaurants and bars.

GBP/USD added gains at 1.2913, to 0.20% by 12:03 GMT. The dollar index, which measures the greenback’s strength against other rivals, was quoted at 96.8, to 0.21%. USD/JPY obtained 0.08%, to 110.48, while AUD/USD gained 0.16% to 0.7479, by 12:11 GMT.

The Caixin Services PMI from China rose to 52.8, higher than the 51.4 level seen in May and up sharply from 51.5 in April.

On the other hand, the dollar fell to seven month lows against a currency basket last week, Friday, after a poor U.S employment report added to uncertainty over the outlook for rate hikes by the Federal Reserve in the second half of the year, however, earlier today, the dollar successfully recovered, edging up against the euro and yen. But it is looking exposed to any renewed optimism from a European Central Bank policy meeting this week.

Last month, the U.S economy added 138, 000 jobs the Labor Department reported, tumbling far short of economists’ anticipation for 185,000 new jobs. Most analysts still believe the unsatisfactory data will not halt the Federal Reserve from increasing interest rates at its meeting later this month.

Currently, traders see a roughly 88% chance of a Fed rate hike on June 14, slightly lower from 89% before the jobs reported. But the stoppage in job growth might affect expectations for an unplanned  economic growth in the second quarter after the economy long drawn-out by just 1.2% year-over-year in the first quarter.

Meanwhile, events in Europe may set the tone for global financial this week, ahead of the European Central Bank policy meeting and British general election.

The trade-weighted value of the pound has fallen by 3% in just under 4 weeks as Prime Minister Theresa May’s bid for a landslide electoral winning that would toughen her hand in talks on leaving the European Union ran into distress.

City Index analyst, Kathleen Brooks, said that “The pound has made an impressive recovery in early trading after a torrid weekend.”

"Although the Tory lead has been eroded, if the FT's poll of polls is correct, then it would suggest that the Conservatives will win this election, but maybe not by such a comfortable majority as was expected a month ago."

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