Pound Mixed as GDP Improves but Shows Signs of Slowing Down

Pound (GBP) Posts Tenuous Gains on Mixed GDP

The Pound (GBP) found modest success against some of its weaker rivals in yesterday’s session following the UK’s mixed GDP report.

The UK economy grew by 0.4% in August, rebounding from July’s 0.1% contraction. However, this was below expectations of 0.5% growth, and economists expect the UK economy to slow down in the fourth quarter of 2021.

Turning to today, a speech from Bank of England (BoE) policymaker Silvana Tenreyro could impact the Pound. As she is one of the more dovish BoE officials, if Tenreyro shows concerns over rising inflation then a rate hike before the end of the year will seem far more likely.

Euro (EUR) Subdued after Eurozone Industrial Production Contracts

The Euro (EUR) was fairly muted yesterday as Eurozone industrial production contracted by 1.6% in August, matching economists’ predictions.

A weaker US Dollar (USD) cushioned the single currency’s downside, thanks to the strong negative correlation between the two.

Amid a lack of Eurozone economic data today, some speeches from European Central Bank (ECB) policymakers could influence EUR exchange rates.

US Dollar (USD) Dented by Risk-On Mood

The US Dollar weakened yesterday as an upbeat market mood saw traders shun the safe-haven currency for riskier investments.

The US CPI release for September did little to support the ‘Greenback’, despite printing above expectations at 5.4%, as investors shrugged off the rise in inflation.

The latest meeting minutes from the Federal Open Market Committee also failed to boost USD, although they revealed that the Federal Reserve expects to begin tapering in mid-November or -December.

Turning to today, USD investors will be looking to the latest initial jobless claims data for fresh impetus.

Canadian Dollar (CAD) Softens as Crude Prices Slip

The oil-sensitive Canadian Dollar (CAD) trended lower through yesterday’s session, as crude prices softened amid expectations that demand growth will slow.

With no notable Canadian data due out today, oil prices may remain the key driver of CAD exchange rates.

Australian Dollar (AUD) Ticks Higher amid Risk-On Trade

The risk-sensitive Australian Dollar (AUD) firmed against many of its rivals overnight, despite a rise in Australian unemployment, thanks to an upbeat market mood.

New Zealand Dollar (NZD) Climbs on Increased Risk Appetite

The New Zealand Dollar (NZD) also strengthened in overnight trade, with a bullish sentiment fuelling demand for the perceived risker ‘Kiwi’.

Samuel Birnie

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