Pound (GBP) Gains amid BoE Speculation
The Pound (GBP) firmed through Friday’s trading session as expectations of more interest rate rises from the Bank of England (BoE) boosted Sterling’s appeal.
Amid higher UK inflation and resilience in the British economy, markets are betting that the BoE could raise rates as high as 5.5%, up from 4.5% currently.
This week starts off quietly, with no GBP data due out. However, tomorrow brings the UK’s latest labour market report. An expected rise in wage growth could reinforce BoE bets, potentially extending the Pound’s gains.
Euro (EUR) Weakens following Dovish ECB Comments
As last week’s session came to a close, the Euro (EUR) tumbled following dovish comments from European Central Bank (ECB) policymaker Francois Villeroy de Galhau.
The rate setter indicated that he expects inflation to slow significantly, which dampened ECB bets ahead of this week’s monetary policy meeting.
EUR may be muted today due to a lack of economic data. However, the week ahead will likely be eventful. Along with a handful of impactful data releases, the ECB rate decision on Thursday could spark volatility.
US Dollar (USD) Slides as Markets Bet on Fed Pause
The US Dollar (USD) fell on Friday as investors bet on a pause in the Federal Reserve’s rate hiking cycle at the bank’s meeting later this week.
Furthermore, an improving market mood put pressure on the safe-haven ‘Greenback’.
In the absence of any more impactful data, the latest US consumer inflation expectations report could impact USD. The forecast downtick could dent Fed bets, thereby weakening the US Dollar further.
Canadian Dollar (CAD) Undermined by Rising Unemployment
The Canadian Dollar (CAD) initially found limited success on Friday as rising oil prices helped it climb against its weaker peers. However, a larger-than-forecast rise in Canadian unemployment then dented the currency in the afternoon.
With no Canadian data out today, movements in the oil market could determine CAD’s direction. Oil has softened so far this morning, so the ‘Loonie’ could face headwinds.
Australian Dollar (AUD) Kept Afloat by RBA Bets
The Australian Dollar (AUD) moved sideways overnight, holding strong against many of its peers. Reserve Bank of Australia (RBA) bets underpinned the ‘Aussie’ while thin trading conditions keep it in a narrow range.
New Zealand Dollar (NZD) Stumbles as Card Spending Declines
The New Zealand Dollar (NZD) softened slightly last night as a drop in card spending and a tepid market mood weighed on the risk-sensitive currency.