Pound Undermined by Slowing Wage Growth

Pound (GBP) Stumbles as UK Wage Growth Cools

The Pound (GBP) saw little support on Tuesday, following signs that wage growth had begun to cool during January.

Wage growth cooled to 5.7% over the three months, indicating that the Bank of England’s (BoE) rate hikes may be beginning to sink in. As such, investors began to pare their expectations of further hikes, leaving Sterling flat.

Today, Chancellor Jeremy Hunt is due to unveil the Spring Budget. If he outlines growth inspiring measures, GBP could strengthen.

Euro (EUR) Fluctuates as Investors Anticipate Hawkish ECB Rate Hike

The Euro (EUR) fluctuated yesterday, but remained underpinned by hopes for hawkish forward guidance form the European Central Bank (ECB).

While risk-on trade prevented EUR from gaining much ground, a weaker US Dollar likely brought some support due to their negative correlation.

Today, data releases for the Euro are thin on the ground. As such, EUR may trade on market sentiment – if the mood becomes upbeat, the safer common currency could weaken.

US Dollar (USD) Slips as Inflation Cools

The US Dollar (USD) fell against most major peers yesterday, following news that both core and headline inflation had fallen.

February’s data did indicate a monthly increase in core inflation, but the ‘Greenback’ was unable to capitalise on this. With the banking sector in the US in a very precarious position, Federal Reserve rate hike bets were diminished.

This afternoon, the latest retail sales data for the US is due to print. A decline of 0.3% is forecast, which could weigh on USD.

Canadian Dollar (CAD) Lifted as Investors Buy the Dip

The Canadian Dollar (CAD) strengthened yesterday, as investors moved to buy the dip after early-week weakness.

Due to a lack of data, movement in the commodity-linked ‘Loonie’ may be driven primarily by oil price dynamics. Should oil rise, CAD could strengthen.

Australian Dollar (AUD) Fluctuates on Shifting Market Mood

The Australian Dollar (AUD) traded in a wide range overnight, but appeared to edge lower as the market mood turned negative.

New Zealand Dollar (NZD) Weakens as Bearish Trade Returns

The risk-sensitive New Zealand Dollar (NZD) weakened in overnight trade, as the market mood appeared to sour.

John Mulcahey

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