Pound (GBP) Mixed on UK’s Economic Outlook
The Pound (GBP) had mixed success yesterday, as the UK’s economic outlook faced both negative and positive news.
On one hand, the Office for Budget Responsibility (OBR) said that the economic impact of Covid would be less than initially feared. On the other, the OBR said that Brexit would be twice as damaging as the pandemic.
Coming up, the UK consumer credit figures for September could cause some movement in the Pound, with a continued increase suggesting high morale and spending among consumers.
Euro (EUR) Jumps following ECB Decision
The Euro (EUR) spiked yesterday, as traders bet on an earlier-than-expected rate hike from the European Central Bank (ECB) following its policy meeting.
Although ECB President Lagarde struck a dovish tone, pushing back against traders’ expectations, her admission that inflation was proving stickier than initially thought saw markets bring forward their predictions for a rate rise.
Following yesterday’s ECB meeting, EUR investors will be keen for the October Eurozone inflation rate later this morning. Could a high reading boost the Euro?
US Dollar (USD) Dented by GDP Slowdown
The US Dollar (USD) tumbled yesterday afternoon as the US GDP growth rate slowed from 6.7% in the second quarter of this year to 2% in the third, below forecasts of 2.7% growth.
The sharper-than-expected slowdown suggests the Delta variant has done more damage to the US economy than expected.
Turning to today, the PCE price index – the Federal Reserve’s preferred measure of inflation – will be published this afternoon. A high reading could boost USD, raising expectations that the Fed will taper next week.
Canadian Dollar (CAD) Stumbles as Oil Subdued
The oil-sensitive Canadian Dollar (CAD) slipped yesterday as WTI crude remained subdued after hitting a two-week low on Wednesday, partly due to a jump in US oil stocks.
Looking ahead, Canadian GDP is expected to have recovered in August, which could bolster CAD exchange rates this afternoon.
Australian Dollar (AUD) Gains on Rise in Retail Sales
The Australian Dollar (AUD) climbed in overnight trade after Australian retail sales unexpectedly rose by 1.3% in September.
New Zealand Dollar (NZD) Dented by Drop in Consumer Confidence
The New Zealand Dollar (NZD) lost ground overnight as a larger-than-expected drop in consumer confidence weighed on the ‘Kiwi’.