Pound rallies as BoE policymaker pushes back on rate cut bets

Pound (GBP) boosted by hawkish BoE comments

The pound (GBP) strengthened yesterday after Bank of England (BoE) Chief Economist Huw Pill warned against cutting interest rates too soon, contrasting recent comments from his colleagues at the bank.

In addition, the UK’s services PMI for April unexpectedly rose, showing that activity in the vital sector was at its highest level since May 2023.

Amid a lack of more impactful data today, the latest business optimism index from the Confederation of British Industry (CBI) could affect Sterling. Will a cheerier outlook among UK businesses for the second quarter of 2024 help the pound gain more ground?

Euro (EUR) firms despite mixed PMIs

The euro (EUR) rose against its weaker rivals on Tuesday after the Eurozone’s preliminary PMIs showed a faster-than-forecast acceleration in service sector activity.

However, a deepening contraction in the bloc’s manufacturing sector put a lid on EUR’s upside and left it vulnerable against stronger peers.

Turning to today, Germany’s business climate indicator for April could buoy EUR exchange rates this morning. Business morale in the Eurozone’s largest economy improved more than expected, hitting an 11-month high.

US dollar (USD) softens as PMIs miss forecasts

The US dollar (USD) struggled yesterday as a cautiously upbeat market mood sapped demand for the safe-haven currency.

Later in the session, the US PMIs for April showed a surprise slowdown in US business activity. This put further pressure on USD exchange rates.

This afternoon, the latest US durable goods orders figure is due out. Could an acceleration in order growth boost USD?

Canadian dollar (CAD) slips as oil prices stumble

The crude-linked Canadian dollar (CAD) fell against most major rivals on Tuesday. A drop in oil prices initially dented CAD before the currency’s positive correlation with USD added to its losses.

Looking ahead, an expected recovery in Canadian retail sales could support CAD exchange rates this afternoon. The currency could then see volatility in the evening as the Bank of Canada (BoC) publishes its latest meeting minutes.

Australian dollar (AUD) jumps following hot inflation data

The Australian dollar (AUD) leapt higher last night after Australia’s latest inflation data came in hotter than forecast. This saw markets push back bets on a rate cut from the Reserve Bank of Australia (RBA).

New Zealand dollar (NZD) buoyed by trade data

The New Zealand dollar (NZD) gained ground overnight thanks to slightly better-than-expected trade data and the currency’s positive correlation with the ‘Aussie’.

Samuel Birnie

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