Pound (GBP) strengthens amid UK hopes
The pound (GBP) extended its upside on Friday, ending a strong week of gains on positive footing.
Hopes of political stability in the UK, stronger British GDP data, and recent hawkish comments from Bank of England (BoE) officials all boosted demand for the pound.
Turning to today, UK economic data is in short supply, which may leave the pound to trade without a clear trajectory.
Euro (EUR) uncertain amid absence of data
The euro (EUR) traded without a clear direction at the end of last week as a lack of notable Eurozone data left the currency rudderless.
While a weaker US dollar (USD) lent EUR support, due to the currencies’ negative correlation, the safe euro still struggled against riskier rivals amid an upbeat market mood.
This morning, the Eurozone’s latest industrial production data is the focus for EUR investors. An expected 1% decline in May could dent the euro.
US dollar (USD) extends downside amid Fed rate cut bets
The US dollar suffered losses on Friday as markets continued to bet on a coming interest rate cut from the Federal Reserve in the wake of Thursday’s cooler inflation reading.
The selling pressure was amplified by the latest US consumer sentiment index. The reading unexpectedly fell for a fourth straight month in July, while also revealing a decline in US consumer inflation expectations.
Looking ahead, two Fed policymakers are due to speak this evening. The focus will likely be on Fed Chair Jerome Powell. Could dovish comments following the recent inflation figures see USD slide?
Canadian dollar (CAD) dragged down by USD correlation
The Canadian dollar’s (CAD) positive correlation with the US dollar saw CAD exchange rates slide on Friday, due to USD’s weakness.
The Bank of Canada’s (BoC) latest Business Outlook Survey could impact CAD this afternoon. Could a gloomy outlook for Canadian businesses see the ‘loonie’ struggle?
Australian dollar (AUD) wobbles in the wake of poor Chinese data
The Australian dollar (AUD) wavered lower overnight following a batch of weaker-than-expected Chinese economic data, including a sharper slowdown in second-quarter GDP growth.
However, speculation that Beijing will bring in new economic stimulus measures cushioned the currency, which trades as a proxy for the Chinese economy.
New Zealand dollar (NZD) slumps as services activity shrinks
The New Zealand dollar (NZD) faced steep losses overnight after new data showed that service sector activity in New Zealand contracted far more than expected in June, hitting its lowest level on record outside of the Covid lockdown period.