Pound Consolidates Gains as More BoE Rate Hikes Look Likely

Pound (GBP) Firms amid BoE Bets

The Pound (GBP) trended higher against most of its peers yesterday as Bank of England (BoE) interest rate expectations continued to underpin the currency.

Recently, record-high wage growth and surprisingly sticky core inflation have boosted bets on more policy tightening from the British central bank.

This morning, a larger-than-forecast fall in UK retail sales is putting pressure on the Pound. Sales contracted by 1.2% in July, versus the forecast drop of 0.5%.

Euro (EUR) Rudderless amid Lack of Data

The Euro (EUR) traded in a wide range yesterday, as a lack of impactful Eurozone data left the currency without a clear direction.

A slight improvement in market sentiment may have undermined EUR against its riskier peers, but the currency’s negative correlation with a weakening US Dollar (USD) kept it cushioned.

Coming up, the Eurozone’s finalised consumer price index is due out this morning. Could confirmation that core inflation held steady in July lift the Euro by boosting European Central Bank (ECB) rate rise bets?

US Dollar (USD) Sheds Post-Fed Gains

After rising in the wake of the Federal Reserve’s hawkish meeting minutes on Wednesday evening, the US Dollar then relinquished its gains on Thursday.

An increase in risk appetite dampened the safe-haven US Dollar’s appeal. Later in the session, however, a drop in jobless claims helped USD claw back some losses.

Looking ahead, a lack of US data today could see the ‘Greenback’ trade on market sentiment. Will a downbeat mood underpin USD?

Canadian Dollar (CAD) Mixed as USD Weakness Offsets Rising Oil

The Canadian Dollar (CAD) struggled to find a clear direction yesterday. Rising oil prices lent the crude-linked ‘Loonie’ support, but CAD’s positive correlation with USD tempered these gains.

A sharp decline in Canadian producer price inflation could dent CAD today, if it is seen as reducing the likelihood of more policy tightening from the Bank of Canada (BoC).

Australian Dollar (AUD) Muted amid Gloomy Mood

The Australian Dollar (AUD) fluctuated overnight, as a lack of data and risk-off mood left the ‘Aussie’ with little support.

New Zealand Dollar (NZD) Struggles as Sentiment Sours

Likewise, the New Zealand Dollar (NZD) wavered near recent lows last night as the risk-sensitive ‘Kiwi’ remained pressured by the downbeat market mood.

Samuel Birnie

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