Pound (GBP) rallies despite weaker PMI
The Pound (GBP) faced a muted morning yesterday after the UK’s final services PMI was revised lower to show a slowdown in activity last month.
However, the increasingly risk-sensitive currency managed to leap higher against its safer rivals in the afternoon amid an improvement in the market mood.
Today, the spotlight is on Chancellor Jeremy Hunt’s Spring Budget. Could growth-boosting measures support the Pound, or will concerns about the costs of Hunt’s plans weigh on GBP?
Euro (EUR) choppy amid mixed economic data
The Euro (EUR) faced uncertain movement yesterday, as mixed data releases pulled the currency in different directions.
Although the Eurozone’s final services PMI was revised higher, producer price inflation in the bloc fell more than forecast in January, thereby increasing bets on interest rate cuts from the European Central Bank (ECB).
This morning, the Eurozone’s latest retail sales data could impact EUR. Sluggish sales growth could keep the common currency subdued.
US Dollar (USD) slumps as services PMI misses forecasts
The US Dollar (USD) plunged yesterday after the ISM services PMI printed lower than expected.
The survey came in at 52.6 in February, below forecasts of 53 and down from 53.4. This larger-than-anticipated slowdown in service sector activity rattled USD investors.
Looking ahead, Federal Reserve Chair Jerome Powell is due to testify in front of Congress this afternoon. Any hints that the bank is starting to consider when to cut interest rates could see USD stumble.
Canadian Dollar (CAD) undermined by USD correlation
Choppy oil prices saw the crude-linked Canadian Dollar (CAD) trade in a wide range yesterday. However, CAD’s positive correlation with USD saw the ‘Loonie’ slip lower overall.
Turning to today, the Bank of Canada (BoC) meets to set monetary policy. While the BoC is widely expected to leave rates unchanged, any dovish signals from the bank could dent the Canadian Dollar.
Australian Dollar (AUD) firms as GDP expands
The Australian Dollar (AUD) rose overnight after Australia’s latest GDP data reported growth in the fourth quarter of 2023. However, a below-forecast reading severely limited AUD’s gains.
New Zealand Dollar (NZD) rebounds on AUD correlation
After initially slipping, the New Zealand Dollar (NZD) then managed to gain ground last night thanks to its positive correlation with the ‘Aussie’.