Pound (GBP) Fluctuates as UK Economic Forecasts Darken
The Pound (GBP) saw mixed trade yesterday, with Sterling making gains against weaker currencies while losing out to safer options.
The Financial Times issued results of a survey of 101 economists, which painted a bleak picture of the UK’s economy in 2023. The vast majority expected the UK’s recession to be the longest and worst out of all G7 nations.
Today, November’s consumer credit data from the Bank of England (BoE) is released. Will a another rise in credit stoke concerns over household debt and weaken the Pound?
Euro (EUR) Slips as German Inflation Falls Further
The Euro (EUR) weakened yesterday as Germany’s consumer price index reported inflation fell for a second consecutive month in December.
Printing at 8.6% down from 10%, German inflation may have offered a hint to inflation across the Eurozone. As such, investors began to pare back their expectations for further tightening from the European Central Bank (ECB).
Today brings the final print of December’s Eurozone services PMI. Should this print as forecast, the impact may be minimal.
US Dollar (USD) Buoyant amid Mixed Market Mood
The US Dollar (USD) made some gains yesterday, as a mixed market mood prompted modest safe-haven flows for the ‘Greenback’.
Similarly, USD was underpinned by the markets aiming for a technical repositioning following last year’s sell-off. However, the fluctuating mood prevented USD from making further gains.
Today brings the release of the latest FOMC minutes. Federal Reserve officials have taken hawkish stances, and Fed Chair Powell indicated a higher terminal rate for interest rates. Investors will be looking for any further indication of tightening, which could buoy the ‘Greenback.
Canadian Dollar (CAD) Boosted by Strong US Dollar
The Canadian Dollar (CAD) was lifted by a strengthening US Dollar, allowing the ‘Loonie’ to negate a further contraction in Canadian manufacturing.
CAD’s positive correlation with USD may drive the pair today, as investors await the latest FOMC meeting minutes. Hints over future tightening may boost the ‘Loonie’ in tandem with USD.
Australian Dollar (AUD) Skyrockets as Market Mood Improves
The risk-sensitive Australian Dollar (AUD) leapt overnight, as the market mood improved dramatically.
New Zealand Dollar (NZD) Recovers as Risk Appetite Returns
Similarly, the New Zealand Dollar (NZD) strengthened massively overnight due to increasing risk appetite through the Asian trading session.