Pound (GBP) Rises as BoE Reassures Markets
The Pound (GBP) got off to a decent start this week as optimism in European markets lifted the moderately risk-sensitive Sterling.
As the world’s central banks took action to stabilise global financial markets, the Bank of England (BoE) gave assurances that the UK banking system ‘remains safe and sound’. Relief that the British banking sector seems resilient helped to lift the Pound.
Movement in the Pound may be muted today as investors await impactful UK events later in the week. Tomorrow brings the latest inflation rate reading ahead of the BoE decision on Thursday.
Euro (EUR) Firms as UBS-Credit Suisse Rescue Calms Investors
The Euro (EUR) also enjoyed the calmer tone in European markets yesterday. EUR investors seemed comforted by the UBS acquisition of failing rival bank Credit Suisse.
However, cautious comments from European Central Bank (ECB) President Christine Lagarde may have limited the single currency’s upside. Lagarde hinted that the recent market turmoil may reduce the need for more interest rate rises.
The common currency could face some headwinds later this morning. Germany’s latest economic sentiment index is forecast to decline for the first time in six months, potentially raising concerns about a downturn in the Eurozone’s largest economy.
US Dollar (USD) Declines as Risk Sentiment Improves
An improving market mood dented the US Dollar (USD) yesterday. As risk appetite increased, the safe-haven ‘Greenback’ faced selling pressure.
Speculation that the Federal Reserve could leave interest rates on hold at its policy meeting this week added to USD’s downside.
A notable lack of US economic data today could see risk sentiment drive movement in the ‘Greenback’.
Canadian Dollar (CAD) Ticks Lower amid USD Weakness
The Canadian Dollar (CAD) softened yesterday as the ‘Loonie’ suffered from its positive correlation with the US Dollar.
Canada’s February consumer price index is the focus for CAD investors today. With inflation forecast to continue easing, the ‘Loonie’ could slide.
Australian Dollar (AUD) Falls following RBA Minutes
The Australian Dollar (AUD) weakened overnight after the Reserve Bank of Australia’s (RBA) latest meeting minutes confirmed the bank’s dovish stance.
New Zealand Dollar (NZD) Drops as Commodities Prices Decline
The New Zealand Dollar (NZD) also fell during overnight trade as a pullback in the commodities market weighed on the resource-linked ‘Kiwi’.