GBP Steady ahead of GDP Release, Pound Euro Exchange Rate Firms
The Pound lacked any strong directional bias on Thursday, with movement in the UK currency mostly influenced by its peers amidst the absence of any fresh impetus.
With the European Central Bank announcing it’s plans to accelerate bond buying, and the US Dollar slipping on retreating yields, the Pound Euro exchange rate firmed on €1.16 and GBP/USD ticked higher.
While Sterling sentiment continues to be underpinned by the UK’s success in its vaccination programme, doubts over whether the UK’s reopening will be able to adhere to the government’s roadmap appears to have capped the upside in recent days.
Meanwhile, the publication of the UK’s latest GDP figures confirmed that the UK economy contracted in January as the latest national lockdown was imposed. While the slump was smaller than forecast, this could still limit any upside potential in the Pound today.
Euro (EUR) Dips as ECB to Accelerate Bond Purchases
The Euro was placed on the defensive yesterday as the European Central Bank (ECB) concluded its latest policy meeting by announcing it is ready to buy bonds at a ‘significantly’ higher pace.
Speaking after the meeting, ECB President Christine Lagarde warned that high coronavirus infection rates and lockdowns are hurting growth, but that the bank has revised its Eurozone GDP forecasts for 2021 slightly higher.
Turning to today’s session, the publication of the Eurozone’s latest industrial production figures could provide some support to the Euro, on the assumption that factory output in the bloc will have rebounded in line with expectations in January.
US Dollar (USD) Slumps as Yields Retreat
The US Dollar maintained its downward trajectory through yesterday’s trading session, as another slump in US Treasury yields and optimism over the passing of Biden’s stimulus package dented USD demand.
However, helping to temper the ‘Greenback’s losses were the latest US initial jobless claims, where a larger-than-expected drop in new claims helped to boost US economic optimism.
Coming up today, we could see the US Dollar attempt to mount a recovery if the University of Michigan’s consumer sentiment index indicates US household confidence continued to improve this month.
Canadian Dollar (CAD) Bolstered by Robust Oil Prices
The Canadian Dollar trended higher on Thursday, as the appeal of the commodity-linked ‘Loonie’ was bolstered by an acceleration in oil prices, which saw WTI crude climb over 1% back above $65 a barrel.
Looking ahead, the Canadian Dollar may build on these gains later today, if data shows that Canadian unemployment fell as expected last month.
Australian Dollar (AUD) Slumps from Highs amid Risk Reversal
After initially jumping overnight on Thursday as markets cheered the news that US President Biden had signed his stimulus package into law, the Australian Dollar shed most of its gains by the end of the Asian trading session, as a rebound in US yields and renewed tensions between Canberra and Beijing dampened market risk appetite.
New Zealand Dollar (NZD) Slumps in Risk-Off Trade
The New Zealand Dollar traded in a similar pattern to the ‘Aussie’ in overnight trade, with some initial gains giving way to selling pressure as market risk appetite weakened.
Data Releases
07:00 GBP GDP (Jan)
07:00 GBP Trade Balance (Jan)
07:00 GBP Industrial Production (Jan)
10:00 EUR Industrial Production (Jan)
13:30 CAD Unemployment Rate (Feb)
15:00 USD Consumer Sentiment (Mar)