Bank of England policy decision rocks the pound

Pound (GBP) wavers lower following BoE decision

The pound (GBP) fluctuated yesterday, trending lower against its stronger peers, as the Bank of England (BoE) unveiled its latest interest rate decision.

While the BoE left its policy untouched, Governor Andrew Bailey signalled that the bank could cut rates faster than markets currently expect, putting pressure on the pound.

This morning, however, the pound has bounced back following the latest UK GDP data. The British economy escaped recession in the first quarter of this year, expanding by 0.6% – above the forecast 0.4% growth.

Euro (EUR) mixed amid ECB rate cut bets

The euro (EUR) faced mixed movement yesterday, initially stumbling as European Central Bank (ECB) rate cut bets put some pressure on the single currency.

EUR was able to rebound against its weaker rivals in the afternoon, however, thanks to its negative correlation with a declining US dollar (USD).

The ECB’s meeting minutes from the last policy decision are due out today. If they reveal a dovish consensus among policymakers, the euro could face resistance.

US dollar (USD) slides as jobless claims jump

The US dollar fell yesterday as new US jobless claims rose more than expected, leaping to the highest level in eight months.

Markets read this as a sign of a slowing US labour market, which in turn boosted bets on multiple rate cuts from the Federal Reserve in 2024 and weighed on the ‘greenback’.

This afternoon, the latest US consumer sentiment index is due out. An expected decline in American household morale could weigh on USD.

Canadian dollar (CAD) unclear as oil prices waver

The crude-linked Canadian dollar (CAD) moved with an uncertain direction yesterday as choppy oil prices left the currency struggling to find a clear trajectory.

Canada’s jobless rate for April is in the spotlight for CAD investors today. Expect to see the Canadian dollar fall if the data reveals another rise in unemployment.

Australian dollar (AUD) trims gains amid lack of data

The Australian dollar (AUD) weakened overnight, trimming yesterday’s gains, as a tepid market mood and lack of Australian data left the currency exposed to losses.

New Zealand dollar (NZD) falls as factory activity contracts

The New Zealand dollar (NZD) also stumbled overnight, as New Zealand’s latest manufacturing PMI revealed that domestic factory activity remained in contraction in April.

Samuel Birnie

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