Pound Muted as UK Enters Period of National Mourning

Pound (GBP) Mixed following Volatile Week for UK

The Pound (GBP) traded without a clear direction on Friday as markets continued to digest the benefits and potential pitfalls of Liz Truss’s energy bill support package.

In addition, the death of Her Majesty The Queen may have added to investor caution. As the country enters a period of mourning, parliamentary proceedings have been halted and the Bank of England (BoE) delayed its interest rate decision.

Turning to today, Sterling is on the defensive after a ‘feeble’ 0.2% rise in GDP in July. This was below the expected 0.4% growth and means the UK economy contracted overall through the first two months of summer.

Euro (EUR) Softens amid Energy Crisis Concerns

The Euro (EUR) stumbled at the end of last week, trimming its weekly gains, as ongoing worries about the European energy crisis weighed on the single currency.

Lingering tailwinds after the European Central Bank’s (ECB) 75-bp interest rate rise on Thursday may have limited losses, although this was offset by warnings of a possible Eurozone recession.

So far this week, the Euro is ticking higher amid a pullback in EU gas prices.

US Dollar (USD) Remains Strong amid Fed Rate Rise Expectations

The safe-haven US Dollar (USD) initially slipped on Friday amid a risk-on market mood.

However, the ‘Greenback’ easily managed to regain its strength as the likelihood of Federal Reserve policy tightening underpinned the currency. In the evening, more Fed policymakers signalled their appetite for aggressive rate rises.

Later today US consumer inflation expectations could pressure USD somewhat. If inflation expectations continue to decline, this could dampen Fed rate hike expectations.

Canadian Dollar (CAD) Undermined by Employment Report

The commodity-linked Canadian Dollar (CAD) fluctuated on Friday as a fairly downbeat employment report offset a steady rise in oil prices.

Amid a lack of Canadian data today, crude prices could drive most movement in the ‘Loonie’.

Australian Dollar (AUD) Finds Success amid Volatility

The Australian Dollar (AUD) experienced high volatility last night, eventually trending up against some of its peers thanks to a bullish market mood.

New Zealand Dollar (NZD) Bolstered by Risk-Positive Trade

Likewise, the New Zealand Dollar (NZD) fluctuated overnight, gaining on its safer rivals amid an increased appetite for risk.

Samuel Birnie

Contact Samuel Birnie


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