Pound (GBP) Fluctuates on Mixed BoE Policy Statement
Trade in the Pound (GBP) was mixed on Thursday, with the Pound US Dollar exchange rate slipping and GBP/EUR making modest gains.
Sterling lacked direction following the conclusion of the Bank of England’s (BoE) latest policy meeting, in which it left interest rates on hold.
While the BoE was broadly upbeat in its outlook for the UK economy, its stance that it would need to see ‘clear evidence of progress’ on inflation before it starts tightening its monetary policy disappointed some GBP investors.
Turning to today’s session, the Pound may continue to struggle after data revealed a record February surge in the public deficit.
However, GBP/EUR is ticking higher so far this morning, hitting €1.17 as the Euro struggles. Meanwhile, the Pound US Dollar exchange rate is trading in a narrow range.
Euro (EUR) Dented by USD Strength
The Euro (EUR) was on the defensive yesterday as the single currency’s negative correlation with the US Dollar (USD) saw it retreat as the latter advanced.
Also limiting the appeal of the Euro were comments from European Central Bank (ECB) President Christine Lagarde, who told European lawmakers on Thursday that an expected acceleration of inflation in 2021 will result in a response from the ECB.
Meanwhile, the Euro may remain on the back foot through today’s session amidst growing concerns that parts of Europe are facing a third wave of coronavirus infections after France announced Paris would be going back into a month-long lockdown.
US Dollar (USD) Rallies on Surging Yields
The US Dollar (USD) rebounded from its post-Fed slump on Thursday, rallying on the back of surging US Treasury yields as they rose to their highest levels since January 2020.
However, tempering these gains somewhat was the latest US initial jobless claims release, which reported an unexpected surge in new claims last week.
Looking ahead, the US Dollar could maintain its positive trajectory today as renewed US-China tensions could see investors favour the safe-haven currency.
Canadian Dollar (CAD) Undermined by Oil Slump
The Canadian Dollar (CAD) retreated through yesterday’s session, as the commodity sensitive ‘Loonie’ was dented by a sharp drop in oil prices.
This downtrend may persist through to today’s session, with Canada’s latest retail sales figures forecast to report another sizable slump in sales growth in January.
Australian Dollar (AUD) Slips as Retail Sales Disappoint
The Australian Dollar (AUD) ticked lower overnight on Thursday, with the currency retreating after Australia’s latest retail sales figures reported a surprise slump in sales growth in February.
New Zealand Dollar (NZD) Dented by US-China Spat
The New Zealand Dollar (NZD) was also weakened in overnight trade following fractious high-level talks between the US and China, which further strained the relationship between the two superpowers.
Data Releases
07:00 GBP Public Sector Borrowing (Feb)
12:30 CAD Retail Sales (Jan)