Pound (GBP) Rises as BoE Hikes Rates
The Pound (GBP) gained against most of its peers yesterday as the Bank of England (BoE) raised interest rates from 0.25% to 0.5%.
Four of the nine members of the Monetary Policy Committee (MPC) voted to raise rates to 0.75%. This foreshadows an even more aggressive pace of policy action than anticipated, thereby boosting GBP.
However, concerns over the UK’s cost-of-living crisis following Ofgem’s 54% rise in the energy cap and amid warnings from the BoE seem to have limited Sterling’s gains.
With no UK economic data due out today, markets may still be mulling over yesterday’s events. Additionally, any new political upsets could affect the Pound.
Euro (EUR) Surges as Lagarde Leaves Door Open to a 2022 Rate Hike
The Euro (EUR) roared higher yesterday amid speculation that the European Central Bank (ECB) could be on the cusp of a more hawkish approach to monetary policy.
Following the bank’s rate decision, ECB President Christine Lagarde did not reiterate her previous view that a 2022 rate rise is unlikely, potentially leaving the door open to a hike later this year.
The latest retail sales data from the Eurozone could trim some of the single currency’s post-ECB gains today. Economists expect sales to have contracted by 0.5% in December.
US Dollar (USD) Slips on Poor Data
The US Dollar (USD) lost ground yesterday amid some disappointing US economic data.
The ISM services PMI edged lower in January, while factory orders in December contracted by more than expected.
US employment data is in focus today. Could the non-farm payrolls shock to the downside, just as the ADP employment figures did earlier in the week?
Canadian Dollar (CAD) Retreats as Oil Prices Dip
The commodity-linked Canadian Dollar (CAD) softened against most of its peers yesterday as oil prices fell through the first half of the session.
Looking to this afternoon, economists expect the latest Canadian jobs data to show a rise in unemployment. This could weigh on the ‘Loonie’.
Australian Dollar (AUD) Stumbles on Cautious RBA
The Australian Dollar (AUD) fell overnight following the Reserve Bank of Australia’s (RBA) Statement on Monetary Policy. In the statement, the RBA highlighted that it was ‘prepared to be patient’ as it monitors inflation – a cautious stance that weighed on the ‘Aussie’.
New Zealand Dollar (NZD) Falls amid Risk-Off Market Mood
The New Zealand Dollar (NZD) also went down in overnight trade as a bearish market mood sapped the appeal of the risk-sensitive ‘Kiwi’.