Pound Falls as Storm Clouds Gather over UK Economy

Pound (GBP) Slips amid Warning Signs in Retail Sector

Despite an initial uptick, the Pound (GBP) weakened overall yesterday. The downside came as markets once again became concerned about the UK economy.

Joules became the latest large company to enter administration, following Made.com last week, as the cost-of-living crisis squeezes the British retail sector.

This morning the UK’s labour market report showed modest signs of a slowdown, with the unemployment rate rising from 3.5% to 3.6%. Meanwhile, wage growth beat forecasts as it continues to climb, keeping pressure on the Bank of England (BoE) to raise interest rates further. This mixed data seems to be weighing on GBP.

Euro (EUR) Wobbles despite Strong Industrial Production

The Euro (EUR) wavered during yesterday’s session, despite Eurozone industrial production expanding more than forecast in September.

Resilience in the US Dollar (USD) may have offset the positive data, due to EUR’s negative correlation with USD. Meanwhile, a risk-on tone in markets saw the safer Euro struggle against its riskier rivals.

Later this morning, a raft of Eurozone data could impact EUR. Germany’s latest economic sentiment index is forecast to show an improvement, which may buoy the single currency. Meanwhile, traders will keep an eye on the Euro area’s final GDP growth rate.

US Dollar (USD) Muted amid Risk-On Mood

The safe-haven US Dollar traded without a clear direction yesterday as a risk-positive tone in markets offset an uptick in Federal Reserve rate rise bets.

Comments from the Fed’s Christopher Waller stemmed USD’s losses after last week’s cool inflation data. Waller said that markets had overreacted and that while the Fed may slow its pace of tightening, the endpoint was still ‘a ways off’.

Looking ahead, the US PPI rate for October is in focus. Could a decline in producer price growth see markets trim rate hike bets once again?

Canadian Dollar (CAD) Softens as Oil Prices Fall

The Canadian Dollar (CAD) flickered lower yesterday as a decline in oil prices weighed on the commodity-linked ‘Loonie’.

Turning to today, Canadian data remains thin on the ground. As a result, commodity prices could drive CAD exchange rates.

Australian Dollar (AUD) Held Back by Chinese Data

The Australian Dollar (AUD) found modest success overnight. The Reserve Bank of Australia’s (RBA) latest meeting minutes supported the ‘Aussie’, as did a risk-on market mood. However, Chinese data missed forecasts, which capped the China-proxy Australian Dollar.

New Zealand Dollar (NZD) Edges Up amid Risk-Positive Trade

The New Zealand Dollar (NZD) also ticked slightly higher in overnight trade, with the risk-sensitive ‘Kiwi’ supported by a bullish sentiment among investors.

Samuel Birnie

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