Pound Sheds Gains as Brexit Tensions Bubble

Pound (GBP) Undermined by Brexit Border Concerns 

The Pound (GBP) initially climbed yesterday following some strong jobs data, with employment reaching pre-pandemic levels in August, but shed its gains in the afternoon. 

Renewed Brexit concerns weighed on Sterling, with another delay to checks on EU imports stoking fears that UK exporters won’t be able to compete as they find themselves saddled with post-Brexit red tape and extra costs. 

The Pound is rising again this morning, after the UK’s CPI printed above expectations, surging from 2% to 3.2%. This is the largest jump in inflation on record and the highest level since March 2012, potentially increasing the likelihood of an early rate hike from the Bank of England (BoE). 

Euro (EUR) Recovers post US CPI 

The Euro (EUR) struggled early in yesterday’s session, as the looming inflation figures from the US kept EUR investors subdued. 

However, after the US CPI missed forecasts, the Euro staged a recovery, posting modest gains against most of its rivals overall. 

The Euro may be able to build on these gains later this morning, with the publication of the Eurozone’s latest industrial production figures, which are expected to print higher in July 

US Dollar (USD) Volatile on Inflation Data 

The US Dollar (USD) had a volatile session yesterday, rising in the run-up to the US inflation release and slumping after the data missed forecasts, then recovering ground again. 

Core US inflation eased by more than expected, dropping from 4.3% to 4% year-on-year and from 0.3% to 0.1% month-on-month, disappointing USD investors. However, a moderately risk-off mood helped bolster demand for the safe-haven currency. 

With US data today set to be rather low-impact, USD could be primarily influenced by global risk sentiment. 

Canadian Dollar (CAD) Steady on Stable Oil Prices 

The Canadian Dollar (CAD) had a mixed day yesterday, with CAD exchange rates seemingly driven by movements in paired currencies, as oil prices remained steady. 

Crude prices have risen slightly this morning and could boost the commodity-linked ‘Loonie’ if they continue to strengthen. 

Australian Dollar (AUD) Regains Losses on Consumer Confidence 

The Australian Dollar (AUD) initially dropped overnight, but managed to regain ground after Australian consumer confidence for this month unexpectedly rose. 

New Zealand Dollar (NZD) Muted amid Risk-Off Mood 

The New Zealand Dollar (NZD) wavered in overnight trade, posting modest losses as risk appetite remains somewhat subdued.