Pound Sterling in Crisis as Markets Reel from Tax Cut Shock

Pound Sterling (GBP) Touches Record Low against USD

After slumping in overnight trade, hitting an all-time low against the US Dollar (USD), the Pound (GBP) managed to bounce back as the day went on.

The downside came as investors remain shaken by the government’s mini-budget from Friday, which could see UK borrowing soar to unsustainable levels. Expectations that the Bank of England (BoE) will intervene with an emergency rate rise helped GBP recoup the overnight losses.

However, the BoE simply released a statement saying it would ‘make a full assessment at its next scheduled meeting’. Pound Sterling slipped again, remaining worryingly weak.

GBP investors will remain focused on government fiscal policy and the Sterling crisis today, with BoE Chief Economist Huw Pill due to speak at noon. Could he calm markets?

Euro (EUR) Wobbles amid ECB Lagarde Speech

The Euro (EUR) fluctuated yesterday, firming against its weaker peers but struggling elsewhere, amid mixed comments from European Central Bank (ECB) President Christine Lagarde.

While Lagarde signalled further interest rate rises to come, she also said the bank expects Eurozone economic activity to ‘slow substantially’ in the coming quarters.

Lagarde is due to speak again today, but unless she says anything new then her comments may have a limited impact on EUR. Instead, the single currency could trade in relation to its negative correlation to USD or news from the Russia-Ukraine war.

US Dollar (USD) Firms amid Risk Aversion and Hawkish Fed

The US Dollar wavered higher yesterday as a risk-off market mood supported the safe-haven currency.

In addition, some hawkish comments from Federal Reserve officials lifted USD later in the day.

Looking ahead, August’s US durable goods orders report is out this afternoon. Will a sharp decline weigh on the US Dollar?

Canadian Dollar (CAD) Slips as Oil Softens

The Canadian Dollar (CAD) fell yesterday as a decline in oil prices dented the crude-linked currency.

Today, oil is starting to tick higher. Could a recovery in crude prices help the ‘Loonie’ regain ground?

Australian Dollar (AUD) Fails to Capitalise on Improving Risk Appetite

The Australian Dollar (AUD) struggled to gain ground overnight, despite a return of risk appetite in Asian markets.

New Zealand Dollar (NZD) Ticks Higher on RBNZ Comments

The New Zealand Dollar (NZD) firmed against some of its peers in overnight trade, perhaps buoyed by comments from Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr, who said that the bank still had work to do on raising interest rates.

Samuel Birnie

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