Pound (GBP) mixed as risk sentiment drives movement
The pound (GBP) moved without a clear trajectory on Tuesday as a lack of UK economic data left GBP exposed to market risk appetite.
This saw the increasingly risk-sensitive currency weaken against its safer peers while rising against its riskier rivals.
Looking ahead, the only UK data due out today is the finalised manufacturing PMI. Confirmation of a contraction in British factory activity could apply some pressure to the pound.
Euro (EUR) climbs as GDP and CPI beat forecasts
The euro (EUR) strengthened during yesterday’s session after Eurozone GDP beat forecasts to show a promising return to growth in the first quarter of 2024.
In addition, the Eurozone consumer price index was slightly hotter than expected. Headline inflation held steady at 2.4% while core inflation eased from 2.9% to 2.7%, above forecasts of 2.6%. These releases saw markets bet on a less aggressive pace of policy loosening from the European Central Bank (ECB).
Markets in the Eurozone are closed today for the May Day holiday. As a result, thin trading conditions could see the euro struggle to find support.
US dollar (USD) climbs amid anxious market mood
The US dollar (USD) gained ground yesterday as a decline in risk appetite boosted the safe-haven currency’s appeal.
Recent optimism around peace negotiations in the Middle East faded after Israeli Prime Minister Benjamin Netanyahu said he would press ahead with his controversial assault on Rafah, ‘with or without a [ceasefire] deal’.
Turning to today, the US dollar could be subdued ahead of the Federal Reserve interest rate decision tonight. USD could then jump in the evening if the Fed strikes a hawkish tone.
Canadian dollar (CAD) plunges on weak GDP and falling oil
The Canadian dollar (CAD) faced heavy losses on Tuesday after Canada’s latest GDP figures missed forecasts. A slump in oil prices added to the crude-linked currency’s downside.
This afternoon, Bank of Canada (BoC) Governor Tiff Macklem is due to deliver a speech. Could dovish comments dent the Canadian dollar?
Australian dollar (AUD) struggles amid gloomy trade
The Australian dollar (AUD) languished near a one-week low last night as weaker data and a cautious market mood kept the ‘Aussie’ on the back foot.
New Zealand dollar (NZD) subdued as unemployment rises
The New Zealand dollar (NZD) was also placed on the defensive last night after New Zealand’s latest labour market data showed a large rise in unemployment in the first quarter of 2024.