Pound Rocked by Bank of England Decision

Pound (GBP) Zigzags Lower despite BoE Rate Hike

The Bank of England (BoE) interest rate decision rocked the Pound (GBP) yesterday. Although the bank raised rates by 25bps and signalled the possibility of more hikes in the future, Sterling stumbled against many of its peers.

The downside was seemingly sparked by the post-decision press conference. BoE Governor Andrew Bailey said the bank expects inflation to fall sharply from April, creating doubt over the likelihood of further interest rate rises.

This morning, the UK’s first-quarter GDP growth rate printed as expected, showing 0.1% growth. However, March’s GDP printed a surprise 0.3% contraction. Could this pressure the Pound today?

Euro (EUR) Firms as Inflation Expectations Rise

The Euro (EUR) found some success yesterday after an uptick in Eurozone consumer inflation expectations bolstered European Central Bank (ECB) rate rise bets.

A risk-off mood in markets also helped the safer Euro strengthen against some of its riskier peers.

This morning, ECB Vice-President Luis de Guindos is due to deliver a speech. If he fails to quell speculation that the bank may have finished tightening policy, EUR could slip.

US Dollar (USD) Climbs amid Souring Sentiment

The US Dollar (USD) rallied yesterday as risk aversion saw traders flock to the safe-haven currency.

A monthly uptick in producer price inflation added to USD’s upside in the afternoon. However, a jump in jobless claims may have limited the US Dollar’s gains.

This afternoon brings the latest consumer sentiment report from the University of Michigan. With household morale expected to decline, the ‘Greenback’ could stumble.

Canadian Dollar (CAD) Pressured by Falling Oil Prices

The Canadian Dollar (CAD) saw mixed movement yesterday. A drop in oil prices dented the commodity-linked ‘Loonie’, while the currency’s positive correlation with the US Dollar helped limit losses.

Canadian data remains in short supply today. As a result, oil prices and USD dynamics may continue to drive CAD, with a dip in crude this morning potentially pressuring the currency.

Australian Dollar (AUD) Subdued amid Risk-Off Mood

The Australian Dollar (AUD) softened last night as a gloomy mood dampened the risk-sensitive currency’s appeal.

New Zealand Dollar (NZD) Declines as Inflation Expectations Soften

The New Zealand Dollar (NZD) dropped overnight as a decline in business inflation expectations saw markets pare back bets on more Reserve Bank of New Zealand (RBNZ) interest rate rises.

Samuel Birnie

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