GBP Rallies on Easing Brexit Uncertainty, Pound to Euro Holds at €1.09
GBP extended its recovery into a third consecutive trading session on Wednesday, with Pound to Euro and US Dollar exchange rates strengthening.
Pound exchange rates went higher against the Euro and US Dollar as Brexit concerns faded on hopes that opposition to the controversial Internal Markets Bill could see it amended in such a way as not to break international law.
This helped to offset domestic economic concerns after the UK’s consumer price index revealed inflation slumped to just 0.2% in August, its lowest levels since 2015.
Top of the agenda going into today’s session will be the Bank of England’s (BoE) latest rate decision.
GBP investors aren’t pricing in any policy changes this month, but will be on the lookout for any hints that the BoE is still exploring the possibility of negative interest rates.
Euro Rangebound as EUR Exchange Rates Struggle for Direction
The Euro (EUR) struggled through yesterday’s trading session as the absence of any notable EUR data and caution ahead of the Federal Reserve rate decision left the single currency without any clear directional bias, with the Euro to US Dollar exchange rate slipping.
The Euro’s struggle for momentum was not helped by ongoing concerns over Europe’s coronavirus resurgence, which continues to dent hopes for a sharp sustained recovery in the Eurozone.
This drove the Euro to US Dollar exchange rate to fall, while the Pound to Euro edged higher towards a key barrier of resistance.
Coming up, the Euro could continue to struggle to find support today as the Eurozone’s final CPI reading for August looks set to confirm the bloc suffered its first month of deflation since 2016.
US Dollar (USD) Subdued Following Dovish Fed
The US Dollar (USD) weakened through yesterday’s European session, undermined by risk-on trade and a weaker-than-expected US retail sales print in August.
The ‘Greenback’s attempts to recover through the afternoon were then thwarted by the Federal Reserve after the US central bank indicated that rates will remain on hold until at least 2023.
Turning to today’s session, the publication of last week’s US initial jobless claims could keep the pressure on the US Dollar if claims remained elevated in the week ending to 12 September.
Canadian Dollar (CAD) Stumbles on Lacklustre Inflation
The Canadian Dollar (CAD) was on the defensive on Wednesday, retreating on the back of Canada’s weaker-than-expected consumer price index which revealed inflation stalled at 0.1% in August, against forecasts it would accelerate to 0.4%.
Australian Dollar (AUD) Finds Fleeting Gains Following Surprise Drop in Unemployment
The Australian Dollar (AUD) spiked overnight on Wednesday, with the ‘Aussie’ initially picking up support as Australia reported a surprise drop in unemployment last month, before a souring of risk sentiment curtailed these gains.
New Zealand Dollar (NZD) Slumps Following Record Fall in GDP
The New Zealand Dollar (NZD) weakened in overnight trade, undermined by New Zealand’s latest GDP release as domestic growth suffered a record 12.2% contraction in the second quarter.