Pound (GBP) Falls amid Political and Economic Woes
The Pound (GBP) retreated yesterday as the afterglow of the government’s tax-cut U-turn faded fast. Concerns about the UK’s political stability quickly replaced any sense of relief, as Liz Truss’s premiership remains in peril.
In addition, confusion over whether the Bank of England (BoE) would postpone selling some of its government gilts contributed to jitters among GBP investors.
This morning, UK inflation exceeded forecasts, edging up from 9.9% to 10.1%. Rather than supporting Sterling, the latest data seems to have unnerved GBP investors due to the deepening cost-of-living crisis.
Euro (EUR) Erratic amid Mixed Trading Signals
The Euro (EUR) fluctuated without a clear direction yesterday as markets responded to mixed German data. Economic sentiment in Europe’s largest economy unexpectedly improved, although it remains close to multi-year lows.
Meanwhile, ongoing Russian attacks in Ukraine and EU policy proposals to tackle gas price volatility also contributed to market turbulence.
Turning to today, the final Eurozone inflation rate could impact EUR, if it surprises markets. A hotter-than-anticipated reading could boost interest rate rise bets, which in turn could see the Euro firm.
US Dollar (USD) Wavers Lower amid Risk-On Mood
The safe-haven US Dollar (USD) also wavered yesterday as it struggled to hold its ground amid a risk-on market mood.
The ‘Greenback’ enjoyed better-than-forecast manufacturing data and a rise in US Treasury yields in the afternoon. However, USD still slipped lower against its stronger peers.
Aside from risk appetite, two Federal Reserve speeches this evening could support the US Dollar. Will the central bank officials maintain their hawkish tone?
Canadian Dollar (CAD) Falls in Tandem with Oil Prices
The Canadian Dollar (CAD) declined yesterday as a drop in oil prices dragged the crude-linked ‘Loonie’ lower.
Looking ahead, Canada’s latest inflation rate is due out later today. Will an expected fall in inflation dent the Canadian Dollar?
Australian Dollar (AUD) Wobbles as Market Mood Shifts
The Australian Dollar (AUD) was mixed in overnight trade as the market mood began to shift, leaving the riskier ‘Aussie’ vulnerable against its stronger peers.
New Zealand Dollar (NZD) Choppy amid Mixed Sentiment
Likewise, the New Zealand Dollar (NZD) wavered overnight as the change in sentiment caused some turbulence in the risk-sensitive ‘Kiwi’.