GBP/USD climbs to three-week high on BoE rate hike bets

Pound (GBP) Buoyed by BoE Rate Hike Bets

The Pound (GBP) firmed on Monday. Speculation regarding a 50bps interest rate hike from the Bank of England (BoE) next month helped to bolster the appeal of the currency.

However these gains were capped by Brexit jitters as the major delays seen at Dover port over the weekend stoked concerns over the ongoing economic impact of the UK’s decision to leave the EU.

The Confederation of British Industry’s latest distributive trade index is likely to be the focus for GBP investors this morning. Will another disappointing snapshot of the UK’s retail sector weaken Sterling?

Euro (EUR) Falls as German Business Morale Tumbles

The Euro (EUR) was placed on the defensive yesterday in response to Germany’s latest IFO business climate index.

The indicator reported German business morale slumped to a new two-year low this month as concerns over a potential gas shortage fuel fears the Eurozone’s largest economy is headed toward a recession.

Concerns over Europe’s energy security could continue dictate movement in EUR exchange rates today, potentially leading the Euro to face further headwinds.

US Dollar (USD) Dented by Easing Fed Rate Expectations

The US Dollar (USD) stumbled out of the gates this week. USD investors continued to rein in their expectations for future Federal Reserve interest rate hikes dragging on the ‘Greenback’.

Also weighing on USD exchange rates on Monday was a prevailing risk-on mood, which further sapped demand for the safe-haven currency.

Looking ahead, the US Dollar’s upside potential is likely to remain limited, with USD investors likely to be reluctant to make any aggressive bets ahead of the Fed’s looming interest rate decision.

Canadian Dollar (CAD) Supported by Uptick in Oil Prices

The Canadian Dollar (CAD) edged higher on Monday. Strengthening oil prices bolstering the appeal of the commodity-linked currency.

Australian Dollar (AUD) Wavers in Mixed Mood

The Australian Dollar (AUD) wavered overnight on Monday as fluctuating market sentiment left the risk-sensitive ‘Aussie’ without any strong directional bias.

New Zealand Dollar (NZD) Subdued amid Tepid Mood

The New Zealand Dollar (NZD) traded similarly to the ‘Aussie’ during today’s Asian session as market risk appetite fluctuated.

Matthew Andrews

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