Pound Volatile as BoE Surprises Markets with Half-Point Hike

Pound (GBP) Fluctuates as BoE Raises Interest Rates

The Pound (GBP) initially strengthened yesterday as markets bet on GBP ahead of an expected 75-bp rate rise from the Bank of England (BoE).

However, the BoE surprised markets with a smaller half-point hike. In addition, the British central bank said that the UK is already in a recession. Sterling subsequently relinquished the day’s gains.

Turning to today, September’s flash PMIs are due out. Although manufacturing activity is set to improve, economists expect UK services activity to have ground to a halt this month. Such a result could weigh on the Pound.

Euro (EUR) Wavers Lower in Choppy Trade

The Euro (EUR) fluctuated yesterday, initially strengthening amid a drop in the US Dollar (USD) and a slightly improved mood around the Russia-Ukraine war.

However, the single currency faced headwinds as the day went on. In the afternoon, a larger-than-expected fall in Eurozone consumer confidence dented EUR.

This morning, the Eurozone PMIs are in focus. Will a deepening contraction in business activity weigh on the Euro?

US Dollar (USD) Wobbles as Risk Sentiment Shifts

The US Dollar fell sharply at the start of yesterday’s European session as the safe-haven ‘Greenback’ suffered some post-Federal Reserve profit-taking and an improvement in market mood.

USD was able to recoup some of its losses in the afternoon as risk sentiment soured again.

Looking ahead, expected improvements in the US PMIs could support the Dollar this afternoon. In the evening, a speech from Fed Chair Jerome Powell may further boost USD.

Canadian Dollar (CAD) Ticks Higher as Oil Prices Rise

The Canadian Dollar (CAD) found some success yesterday as an uptick in oil prices buoyed the commodity-linked ‘Loonie’.

Later today Canadian retail sales could impact CAD. Will a forecast slump in sales dent the Canadian Dollar?

Australian Dollar (AUD) Stumbles despite PMI Results

The Australian Dollar (AUD) slipped overnight, despite better-than-expected PMI results, as a downbeat market mood weighed on the risk-sensitive ‘Aussie’.

New Zealand Dollar (NZD) Slips amid Risk-Off Mood

Likewise, the New Zealand Dollar (NZD) softened in overnight trade as a bearish mood pressured the ‘Kiwi’.

Samuel Birnie

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