Pound Zigzags Higher on Strong Retail Sales

Pound (GBP) Gains Ground in Volatile Trade 

The Pound (GBP) experienced some volatility on Friday following some mixed UK data but managed to zigzag higher against most of its rivals. 

Although UK retail sales recovered by more than forecast, public sector borrowing also printed above expectations as inflation pushed up the cost of servicing government debts. 

Turning to today, Sterling may be subdued as the EY ITEM Club cut its growth forecasts for this year and next due to persistently high inflation and ongoing supply chain disruption. 

Euro (EUR) Subdued as Austria Enters Lockdown 

The Euro (EUR) was muted on Friday as investors fear the reintroduction of Covid measures across the European continent. 

Amid surging Covid cases, Austria announced a new national lockdown. Meanwhile, some German states have imposed restrictions, as have Belgium and the Netherlands. 

The single currency may continue to struggle today after these new Covid measures triggered protests and riots in a number of EU countries, with Dutch police firing warning shots as protesters turned violent. 

US Dollar (USD) Firms as Market Sentiment Sours 

The US Dollar (USD) strengthened over Friday’s session as a risk-off environment boosted the appeal of the safe-haven currency. 

The ‘Greenback’ was also underpinned by ongoing rate hike expectations from the Federal Reserve after US inflation hit a 13-year high last week. 

If Covid concerns in Europe start to weigh on global sentiment today then the US Dollar may continue to climb. 

Canadian Dollar (CAD) Wobbles on Lacklustre Data 

The commodity-linked Canadian Dollar (CAD) had a mixed day on Friday as oil prices slipped but Canadian retail sales contracted by far less than economists expected. 

With a lack of Canadian data today, crude prices may drive most movement in the oil-sensitive ‘Loonie’. 

Australian Dollar (AUD) Gains as Market Mood Improves 

The Australian Dollar (AUD) firmed overnight as rising commodities and an improving market mood boosted the risk-sensitive ‘Aussie’. 

New Zealand Dollar (NZD) Buoyed by Risk-On Sentiment 

The New Zealand Dollar (NZD) also ticked higher in overnight trade, boosted by an increased appetite for risk and higher materials prices. 

Samuel Birnie

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