Pound Rallies ahead of BoE Decision, US Dollar Dips as Market Mood Improves

Pound (GBP) Climbs on BoE Expectations

The Pound (GBP) rallied through yesterday’s session, buoyed by expectations of a hawkish shift in the Bank of England’s (BoE) outlook later this week.

Following the US Federal Reserve’s projections for an earlier-than-anticipated rate hike and the UK’s sharp rise in the most recent inflation figures, many expect the BoE to adopt a more hawkish stance in their interest rate decision on Thursday. However, the bank is likely to leave interest rates unchanged.

Turning to today, the Confederation of British Industry’s order book balance is forecast to rise again to +18, its highest level since May 1988, which could further boost Sterling.

Euro (EUR) Falls ahead of ECB Speech

The Euro (EUR) dropped against most of its peers yesterday, despite EUR/USD rising on a dip in the US Dollar (USD).

The single currency fell ahead of European Central Bank (ECB) President Christine Lagarde’s speech, in which she reiterated the bank’s current view that ‘[t]ightening would be premature and would pose a risk to the ongoing economic recovery.’

Looking ahead, the Eurozone’s consumer confidence flash is expected to show a slight rise from -5 in May to -3 in June. While still in negative figures, an increase in consumer confidence could potentially give the single currency some support.

US Dollar (USD) Undermined by Profit-Taking

The US Dollar dipped yesterday, as a shift in market mood triggered some profit-taking among investors.

A sudden change in global risk sentiment saw some selling-off in USD, but the ‘Greenback’ is still strong following the Fed’s hawkish comments last week, which may continue to support the currency.

In the absence of any major data releases from the US, risk appetite could play a big part in USD movements today.

Canadian Dollar (CAD) Rebounds on Climbing Crude Prices

The Canadian Dollar (CAD) climbed during yesterday’s trading session, as WTI crude hit $73.90 a barrel, boosting the oil-linked ‘Loonie’.

If oil prices continue rising, the Canadian Dollar could make some more gains today.

Australian Dollar (AUD) Down amid Trade Tensions with China

The Australian Dollar (AUD) ticked lower in overnight trade, as trade tensions with China saw the ‘Aussie’ cede the modest gains it made during yesterday’s European session.

New Zealand Dollar (NZD) Dips despite High Consumer Confidence

The New Zealand Dollar (NZD) also trended slightly lower overnight, despite the Westpac consumer confidence index rising to 107.1 in the second quarter of this year – its highest reading since the last quarter of 2018.


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