Pound (GBP) Subdued as BoE Rate Decision Looms
The Pound (GBP) continued to edge lower mid-week as markets were spooked by a growing row between the US and UK over Huawei’s involvement in the rollout of Britain’s 5G network.
In a visit to the UK, US Secretary of State Mike Pompeo urged the government to ‘relook’ at the decision, warning it could impact UK-US information sharing, with GBP investors fearing the dispute could negatively affect a post-Brexit trade deal between the UK and the US.
Also keeping a cap on Sterling was the uncertainty ahead of today’s rate decision by the Bank of England (BoE) as the odds of a rate cut from the bank remain 50-50.
Should the BoE opt for a rate cut this month then it’s likely we’ll see the Pound come under some pressure later this afternoon.
Euro (EUR) Flat Following German Consumer Sentiment
The Euro (EUR) was mostly rangebound through Wednesday’s trading session as markets digested Germany’s latest consumer sentiment index.
This revealed a surprise uptick in consumer confidence in February, with the signing of a preliminary trade deal between the US and China appearing to lift confidence in the Eurozone’s largest economy.
EUR investors will be hoping this improved outlook will be reflected in the Eurozone’s business confidence index later this morning, with a solid uptick in sentiment potentially buoying the single currency.
US Dollar (USD) Consolidates Gains as Fed Leaves Rates on Hold
The US Dollar (USD) firmed yesterday as the Federal Reserve delivered its first rate decision of 2020.
As expected, the Fed voted to leave interest rates on hold this month, with a broadly upbeat outlook for the US economy helping to buoy USD exchange rates.
Coming up later in today’s session the latest US GDP figures are expected to confirm that domestic growth expanded by a healthy 2.1% in the fourth quarter, potentially offering some support to the US Dollar.
Canadian Dollar (CAD) Steady as Oil Rally Continues
The Canadian Dollar (CAD) held its ground on Wednesday, with the oil-sensitive ‘Loonie’ stablising as WTI crude prices continued to creep higher in response to a sharp contraction in US crude inventories.
Australian Dollar (AUD) Slips Despite Falling Odds of RBA Rate Cut
The Australian Dollar (AUD) edged lower through yesterday’s session, with the currency failing to capitalise on the declining odds of a rate cut from the Reserve Bank of Australia (RBA) in February following an upbeat inflation reading.
New Zealand Dollar (NZD) Muted as Risk-Off Mood Persists
The New Zealand Dollar (NZD) was also left on the back foot mid-week after warnings over the potential impact of the coronavirus outbreak on China’s economy left investors wary of risk-sensitive currencies like the ‘Kiwi’.
Data Releases
10:00 EUR Business Confidence (Jan)
10:00 EUR Unemployment Rate (Dec)
12:00 GBP BoE Rate Decision
13:00 EUR German Inflation Rate (Jan)
13:30 USD GDP (Q4)