Pound (GBP) Tanks as BoE Says UK in Recession
The Pound (GBP) slumped yesterday as the Bank of England (BoE) delivered a jumbo interest rate rise of 75bps, despite saying that the UK economy has entered a recession.
According to the bank’s latest analysis, the UK slipped into recession in the third quarter of this year and will remain in negative growth until mid-2024. As a result, the BoE expects to slow the pace of its tightening cycle.
Turning to today, a speech from BoE Chief Economist Huw Pill could impact the Pound. More downbeat comments could keep pressure on GBP exchange rates.
Euro (EUR) Undermined by USD Strength
The Euro (EUR) was mixed yesterday, rising against its weaker rivals but losing ground elsewhere.
The Eurozone’s unemployment rate supported EUR after dropping to a record low of 6.6%. However, the Euro’s negative correlation to a stronger US Dollar (USD) kept a lid on the single currency.
Later this morning, European Central Bank (ECB) President Christine Lagarde is due to speak. If she sounds dovish, it could dent the Euro; if she strikes a more hawkish tone then EUR could climb.
US Dollar (USD) Continues to Climb Post Fed Hike
The US Dollar extended its upside yesterday, enjoying ongoing tailwinds from the Federal Reserve interest rate decision on Wednesday evening.
However, USD trimmed its gains following the publication of the ISM non-manufacturing PMI. The closely watched survey revealed a larger-than-expected slowdown in US service-sector activity, thereby denting the Dollar.
Looking ahead, the latest US employment data, particularly the payrolls figures, could have a big impact on the ‘Greenback’. If the American labour market remains strong, USD could climb even higher.
Canadian Dollar (CAD) Firms in Tandem with USD
The Canadian Dollar (CAD) rose yesterday as the ‘Loonie’ enjoyed its increasingly strong positive correlation to the US Dollar.
Today, Canada’s latest raft of employment data could trigger some CAD movement. Will an upbeat snapshot of the country’s labour market boost the Canadian Dollar?
Australian Dollar (AUD) Surges amid Risk-On Rally
The Australian Dollar (AUD) jumped higher overnight as a risk-on rally and stronger commodities prices boosted the resource-linked ‘Aussie’.
New Zealand Dollar (NZD) Strengthens on Cheery Market Mood
Likewise, the risk-sensitive New Zealand Dollar (NZD) rallied amid the bullish market mood.