Pound Struggles to Hold Gains as Market Mood Sours

Pound (GBP) Struggles to Hold Gains from Strong Jobs Data

The Pound (GBP) climbed at the start of yesterday’s session, as strong employment reports cheered GBP investors.

However, Sterling relinquished its gains in the afternoon as market sentiment soured and concerns over the end of the furlough scheme undermined the jobs data.

This morning’s UK GDP data shows that the economy grew by 0.4% in August, just below forecasts of 0.5% but above July’s -0.1% reading. However, with the UK economy still 0.8% below its pre-pandemic level, any GBP gains may be limited.

Euro (EUR) Weakens as Economic Sentiment Index Misses Forecasts

The Euro (EUR) lost ground yesterday after Germany’s ZEW economic sentiment index for October fell more than expected, dropping to 22.3, the worst reading since March 2020.

Investor morale was hammered by persisting supply bottlenecks and rising inflation, presenting a gloomy outlook for Europe’s largest economy.

Looking ahead, EUR could face further headwinds later this morning as industrial production in the Eurozone is expected to have shrunk by 1.6% in August.

US Dollar (USD) Recoups Losses as Market Sentiment Sours

The US Dollar (USD) initially slipped during yesterday’s session but managed to bounce off the day’s lows as a shift in risk appetite supported the safe-haven ‘Greenback’, causing it to trade sideways overall.

US job openings held near a record high, causing some concern that issues in the labour market could drag on economic growth and therefore adding to the downbeat mood.

The latest inflation rate could cause movement in the US Dollar today, with a high reading increasing the likelihood of imminent action from the Federal Reserve. USD investors will also be looking to the latest meeting minutes from the Federal Open Market Committee (FOMC) this evening for fresh impetus.

Canadian Dollar (CAD) Strong as Oil Holds Steady

The commodity-linked Canadian Dollar (CAD) gained against most of its peers yesterday, supported by steady oil prices, as WTI crude held near seven-year highs at around $80.50 a barrel.

With no notable Canadian data due out today, oil prices may continue to be the primary influence on CAD exchange rates.

Australian Dollar (AUD) Dented by Drop in Consumer Confidence

The Australian Dollar (AUD) trended lower overnight as Australian consumer confidence unexpectedly dropped in October.

New Zealand Dollar (NZD) Slips as Business Morale Falls

The New Zealand Dollar (NZD) also ticked lower against most of its peers in overnight trade following a fall in business confidence.