Pound (GBP) Slumps as Inflation Misses Forecasts
The Pound (GBP) suffered a heavy selloff yesterday after softer-than-expected UK inflation figures saw markets rein in expectations for more Bank of England (BoE) interest rate hikes.
Analysts now expect the BoE to lift rates by 25bps at its August meeting, rather than 50bps, and many believe that interest rates will peak below 6%.
Turning to today, the Pound could remain on the defensive as a lack of data leaves the currency with little support. GBP investors may be hesitant to place aggressive bets ahead of tomorrow’s retail sales report.
Euro (EUR) Undermined by USD Correlation
The Euro (EUR) initially found success yesterday, with an upward revision to the Eurozone’s core inflation rate providing EUR with an upside.
However, the safer single currency faced trouble as the session progressed due to an increasing appetite for risk and the Euro’s negative trading relationship with a recovering US Dollar (USD).
Later this afternoon, an expected stalling in Eurozone consumer confidence could dampen EUR exchange rates.
US Dollar (USD) Firms despite Recovering Market Mood
The US Dollar continued to recoup some of last week’s losses yesterday, with the safe-haven ‘Greenback’ continuing to attract demand despite the market mood improving during the European session.
USD seemed to be the main beneficiary of the slump in GBP, with the Pound’s selloff providing the US Dollar with cross-driven strength.
Coming up, the latest jobless claims figure could impact USD. An expected uptick could hint at a cooling labour market, which may weigh on Federal Reserve rate rise bets and therefore dent the US Dollar.
Canadian Dollar (CAD) Rises amid Stronger Oil Prices
The Canadian Dollar (CAD) climbed yesterday as rising oil prices lifted the crude-linked ‘Loonie’. Hopes of Chinese economic stimulus and easing inflation boosted demand expectations.
Oil price movements could continue to be the key factor driving CAD exchange rates today. Will a sustained upside in crude see the Canadian Dollar climb higher?
Australian Dollar (AUD) Leaps on Upbeat Jobs Report
Stronger-than-expected jobs data saw the Australian Dollar (AUD) jump last night. Signs that the Australian labour market remains tight boosted expectations of another rate hike from the Reserve Bank of Australia (RBA).
New Zealand Dollar (NZD) Climbs Alongside AUD
The New Zealand Dollar (NZD) also gained ground in overnight trade, with the ‘Kiwi’ enjoying its positive correlation with the ‘Aussie’.