Pound (GBP) uncertain amid economic forecasts
The pound (GBP) traded without a clear trajectory on Thursday, despite the British Chambers of Commerce (BCC) upgrading its UK growth forecasts for 2024 and 2025.
Any upside potential was seemingly offset by a new survey from the Bank of England (BoE), showing that businesses expect wage growth and output price inflation to slow in the months ahead – two factors that could lead to lower headline inflation and BoE interest rate cuts later in the year.
UK data remains scarce as this week’s session comes to a close. As a result, GBP movement may be uncertain.
Euro (EUR) rises as ECB dampens future rate cut bets
The euro (EUR) climbed yesterday as the European Central Bank (ECB) struck a hawkish tone after cutting interest rates for the first time in eight years.
Following the rate cut, which was fully priced in by markets, the ECB said it would keep rates ‘sufficiently restrictive’ to bring inflation back down to target. This saw investors scale back bets on future ECB cuts.
Later this afternoon, ECB President Christine Lagarde is due to deliver a speech. If she reiterates the bank’s commitment to taming inflation in the long term, the euro could consolidate its gains.
US dollar (USD) undermined by rising jobless claims
The US dollar (USD) initially ticked higher on Thursday, as a slight rise in US Treasury yields underpinned the ‘greenback’.
However, a larger-than-expected increase in the latest initial jobless claims figure from the US saw the American currency slash its gains in the afternoon.
The key release today is the US non-farm payrolls report for May. After April’s figure came in significantly below expectations, a similarly weak reading last month could see the US dollar slide.
Canadian dollar (CAD) volatile on weak PMI and strong oil prices
The crude-linked Canadian dollar (CAD) fluctuated yesterday as an unexpected slowdown in Canadian economic activity reported by the latest Ivey PMI was offset by a strong rise in oil prices.
CAD exchange rates could face fresh pressure today as Canadian unemployment is forecast to have ticked up in May, with the jobless rate expected to strike a 28-month high of 6.2%.
Australian dollar (AUD) firms amid increasing risk appetite
The risk-sensitive Australian dollar (AUD) ticked higher last night thanks upbeat Chinese trade data and an improving market mood.
New Zealand dollar (NZD) regains ground as market mood improves
A decline in domestic manufacturing sales initially pressured the New Zealand dollar (NZD) overnight before an increase in risk appetite helped the ‘kiwi’ claw back its losses.