Pound (GBP) Undermined by Rate Hike Pause Expectations
Amid thin data releases, the Pound (GBP) came under pressure amid speculation that the Bank of England (BoE) could begin to pause rate hikes.
Following Wednesday’s cooler-than-expected CPI data, analysts and investors have been readjusting their expectations. While a 25bps hike is expected in March, further tightening from the BoE is an unknown variable.
This morning, the UK’s retail sales data for January was published, printing far above forecasts and showing an increase of 0.5%. However, it appears to have done little for Sterling so far. GBP could gain ground as analysts pore over the data.
US Dollar (USD) Rises as PPI Comes In Hot
The US Dollar (USD) strengthened on Thursday, as the latest PPI data showed an above-forecast increase.
Furthermore, jobless claims fell by 1,000, pointing to a tight labour market. As such, room remains for the Federal Reserve to continue tightening monetary policy, as inflation appears to be stickier than hoped.
Today, import and export prices could shape the ‘Greenback’. With both figures forecast to have declined in January, the US Dollar may struggle for support.
Euro (EUR) Mixed despite 50bps Rate Hike Promise
The Euro (EUR) saw mixed trade on Thursday, despite European Central Bank (ECB) President Christine Lagarde promising a further 50bps interest rate hike.
Speaking to the European Parliament, President Lagarde reiterated the ECB’s aim of curtailing inflation. However, analysts were unsure of the future path the ECB would take. Core inflation fears from the ECB were downplayed by some commentators, leaving the common currency in flux.
German PPI data published this morning came in slightly higher than expected, although it still showed a steep decline in producer prices last month. Nevertheless, EUR is currently firming amid a downbeat market mood.
Canadian Dollar (CAD) Muted by Oil Price Slump
The oil-linked Canadian Dollar (CAD) struggled for support on Thursday, as oil prices continued to slide.
PPI data for January is due to print today. If this shows a further fall in producer prices, CAD may lose more ground.
Australian Dollar (AUD) Sinks on Risk Averse Trade
The Australian Dollar (AUD) fell overnight, as a souring market mood kept the risk-sensitive ‘Aussie’ on the back foot.
New Zealand Dollar (NZD) Falls as Market Mood Sours
The risk-sensitive New Zealand Dollar (NZD) weakened in overnight trade, as a bearish mood dragged the ‘Kiwi’ lower.