Pound Falters following Contraction in UK GDP

Pound (GBP) Weakens as UK Economy Contracts

The Pound (GBP) fell on Friday as new data revealed a contraction in the UK economy.

Month on month, UK GDP shrank by 0.6% in June. Although this was better than the forecast 1.3% contraction, it still added to fears about the trajectory of the country’s economy.

A lack of UK data today could see Sterling struggle for direction. Investors may also refrain from making too many trades ahead of tomorrow’s potentially impactful labour market report.

Euro (EUR) Falters despite Positive Production Data

The Euro (EUR) wavered lower on Friday, despite a larger-than-forecast rise in Eurozone industrial production.

The downside came in part from the Euro’s negative correlation to a strengthening US Dollar (USD). Ongoing concerns over Europe’s energy crisis also weighed on the single currency.

Amid a lack of notable Eurozone data today, EUR may once again trade on its correlation with USD.

US Dollar (USD) Rallies as Consumer Morale Improves

The US Dollar recovered at the end of last week after seemingly entering oversold conditions. USD had slumped earlier in the week as US inflation cooled significantly, but hawkish Fed comments prompted fresh USD buying.

In addition, the latest US consumer sentiment data beat forecasts on Friday. The index rose from 51.5 to 55.1, above expectations of a rise to 52.5, adding to optimism about the US economy.

Turning to today, a lack of market-moving data may see the safe-haven US Dollar trade primarily on risk appetite.

Canadian Dollar (CAD) Muted as Oil Prices Slip

The Canadian Dollar (CAD) was mixed on Friday, rising against its weaker peers but losing ground elsewhere as a decline in oil prices softened demand for the crude-linked currency.

With no notable Canadian data out today, oil market movements may continue affecting CAD.

Australian Dollar (AUD) Dips following Poor Chinese Data

The Australian Dollar (AUD) fell overnight following signs that the Chinese economic recovery is slowing. China’s latest retail sales and industrial production unexpectedly eased.

New Zealand Dollar (NZD) Falls as Market Mood Sours

Likewise, the New Zealand Dollar (NZD) lost ground in overnight trade as the downbeat Chinese data dampened the market’s appetite for risk.

Samuel Birnie

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