Pound Strikes Multi-Month Lows as BoE Keeps Rates Unchanged

Pound (GBP) Slumps on Dovish BoE Decision

The Pound (GBP) fell to multi-month lows yesterday as the Bank of England (BoE) left interest rates unchanged for the first time in two years.

Although the BoE kept the door open to further tightening in the future, some economists speculated that UK interest rates have peaked.

A slightly weaker-than-forecast recovery in retail sales has failed to lift GBP so far this morning. September’s PMIs are the focus moving forward. Could an ongoing contraction in business activity see Sterling fall further?

Euro (EUR) Rises amid Risk Aversion

The Euro (EUR) firmed yesterday as a risk-off mood and a slight decline in the US Dollar (USD) both lifted the safer single currency.

Meanwhile, mixed European Central Bank (ECB) comments triggered some choppy trade in EUR. Policymaker Martin Kazaks said he was ‘satisfied’ with where rates are now but warned about upside risks to inflation.

This morning, the Eurozone’s own PMI results are likely to drive movement. With both the manufacturing and services scores remaining in contraction territory, EUR could stumble.

US Dollar (USD) Buoyed by Fed Hike Speculation

The US Dollar struck multi-month highs yesterday, in the wake of the Federal Reserve’s interest rate decision on Wednesday evening.

The Fed signalled that another rate hike remained on the table, triggering a rally in USD. However, a bout of profit-taking trimmed the currency’s gains as investors sought to cash in on the US Dollar’s strength.

Although not as impactful as the ISM releases, this afternoon’s US PMI surveys could move the ‘Greenback’. Any signs that the American economy is resilient could boost Fed bets, potentially lifting USD.

Canadian Dollar (CAD) Cushioned by Rising Crude Prices

The Canadian Dollar (CAD) faced mixed trade yesterday, with CAD retreating from recent highs in tandem with USD, although an uptick in oil prices kept the crude-linked ‘Loonie’ afloat.

Canada’s latest retail sales report could bolster CAD today, as economists expect to see an acceleration in sales growth in July.

Australian Dollar (AUD) Rebounds on Positive Data and Upbeat Mood

The Australian Dollar (AUD) initially slipped last night before staging a strong recovery. A better-than-forecast services PMI and a cheery market mood boosted the risk-sensitive ‘Aussie’.

New Zealand Dollar (NZD) Rallies after Weak Data Dip

The New Zealand Dollar (NZD) dropped during overnight trade after New Zealand’s trade deficit unexpectedly swelled. The risk-on impulse in markets then helped NZD regain lost ground.

Samuel Birnie

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