Pound Strengthens as Markets Hope for Milder UK Recession

Pound (GBP) Gains Ground amid Brighter UK Outlook

The Pound (GBP) strengthened yesterday amid hopes of a milder UK recession following recent above-forecast economic data, including Wednesday’s PMI surveys.

Expectations of less-aggressive Federal Reserve interest rate rises added to the optimism by spurring on a rally in British bond markets, thereby lowering the cost of government borrowing and easing pressure on the UK public finances.

There’s no notable UK data due out today. As a result, trade in Sterling may be sluggish.

Euro (EUR) Falls as ECB Minutes Reveal Recession Fears

The Euro (EUR) weakened yesterday, despite a larger-than-expected improvement in Germany’s Ifo business climate indicator.

The common currency suffered deeper losses in the afternoon following the European Central Bank’s (ECB) meeting minutes. Policymakers expressed concerns about a possible Eurozone recession, which could mean the bank opts for smaller interest rate rises moving forward.

Later today, ECB Vice-President Luis de Guindos is due to speak. Could dovish comments see the Euro fall further?

US Dollar (USD) Subdued amid Thanksgiving Holiday

The US Dollar (USD) was muted yesterday as American markets were closed for the Thanksgiving holiday.

Headwinds following the Federal Open Market Committee’s (FOMC) dovish meeting minutes on Wednesday evening carried through into Thursday’s session. With investors paring back expectations for Fed rate rises, the US Dollar slipped.

Amid a lack of US economic data today, risk appetite could drive most movement in the safe-haven ‘Greenback’.

Canadian Dollar (CAD) Rudderless amid Muted Trade

The Canadian Dollar (CAD) traded without a clear direction yesterday amid thin trading conditions. The ‘Loonie’ slipped against its stronger peers while making gains elsewhere.

Turning to today, movements in the crude market could influence the oil-linked Canadian currency.

Australian Dollar (AUD) Rangebound as Risk Appetite Stalls

The risk-sensitive Australian Dollar (AUD) fluctuated in a narrow range overnight amid a lukewarm market mood and a lack of data.

New Zealand Dollar (NZD) Stumbles following Weak Data

The New Zealand Dollar (NZD) wavered lower in overnight trade after New Zealand’s latest retail sales and consumer confidence reports both came in weaker than forecast.

Samuel Birnie

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