GBP Directionless ahead of BoE, Pound US Dollar Slipping
GBP exchange rates traded in a narrow range on Wednesday, while the Pound US Dollar exchange rate continues to fall, hitting $1.35 this morning
Sterling is struggling to find momentum ahead of the Bank of England’s (BoE) latest rate decision.
The only data of note for GBP investors yesterday was the UK’s latest PMI figures, which confirmed growth in the UK service sector contracted last month, but that the outlook for businesses is growing increasingly positive.
Centre stage today we have the conclusion of BoE’s first policy meeting of 2021. No policy changes are expected from the BoE this month, but a further downplaying of negative interest rates could help to energise Sterling.
Euro Weakens despite Upbeat Inflation Figures
Euro (EUR) exchange rates continued to drift lower through yesterday’s trading session, as the single currency’s bearish run stretched into its third consecutive session.
The dip in EUR exchange rates came in spite of the Eurozone’s consumer price index showing a strong rebound in inflation last month.
Looking ahead, the publication of the Eurozone’s latest retail sales figures this morning could drive the Euro even lower if we see Germany’s collapse in sales growth in December mirrored in the bloc’s release.
US Dollar Strengthens on US Stimulus Hopes
The US Dollar (USD) remained well positioned against the majority of its peers on Wednesday, with the currency buoyed by rising US treasury yields amidst US stimulus optimism.
However, the ‘Greenback’ relinquished some of these gains later in the session after stronger-than-expected ADP employment figures and the strongest ISM non-manufacturing PMI in two years.
Turning to today’s session, the US Dollar may face some pressure, should last week’s initial jobless claims see another drop off.
Canadian Dollar Gains on Oil Surge
The Canadian Dollar (CAD) rallied again on Wednesday, with the commodity-linked currency receiving a boost as WTI oil raced past $55 a barrel.
Australian Dollar Firms on Upbeat Trade Data
The Australian Dollar (AUD) strengthened overnight on Wednesday, with the ‘Aussie’ receiving a lift from surprisingly upbeat trade balance figures, with Australia’s trade surplus expanding to a six-month high.
New Zealand Dollar Buoyed by Improving Risk Appetite
The New Zealand Dollar (NZD) also ticked higher in overnight trade as an improvement in market sentiment reflected well on the risk-sensitive ‘Kiwi’.