Pound (GBP) slips as inflation misses forecasts
The pound (GBP) fell yesterday after the UK’s consumer price index came in lower than expected, thereby reviving bets on two more interest rate cuts from the Bank of England (BoE) this year.
Although headline inflation rose from 2% to 2.2% in July, this was below the forecast 2.3%. Meanwhile, core inflation cooled more than anticipated, while services inflation – a key measure for the BoE – also eased.
This morning, the pound is attempting to regain ground after the UK’s latest GDP figures reported a solid 0.6% expansion in the second quarter, as the British economy further recovered from its recession at the end of 2023.
Euro (EUR) boosted by decline in USD
The euro (EUR) strengthened yesterday, with the single currency enjoying its significant negative correlation with a weakening US dollar (USD).
New Eurozone data seemed to have little impact on EUR, despite an unexpected contraction in industrial production, as the latest GDP growth estimate for the second quarter printed in line with the preliminary results.
Turning to today, the common currency could face mixed movement amid a lack of Eurozone economic data.
US dollar (USD) falls amid easing US inflation
The US dollar struggled yesterday, with the US dollar index – which measures USD against a basket of currencies – falling to a fresh seven-month low.
USD’s downside seemed to come as investors abandoned the currency ahead of the latest US CPI figures. As expected, the data showed cooling US inflation, thereby reinforcing bets on multiple rate cuts from the Federal Reserve in the month ahead.
The key release for USD today is likely to be the latest US retail sales figures. Rebounding sales growth in July could lift the US dollar.
Canadian dollar (CAD) mixed amid lack of data
The Canadian dollar (CAD) was mixed yesterday, although the ‘loonie’ did manage to rise against its weaker peers, despite an absence of data and falling oil prices.
Amid an ongoing lack of Canadian economic data today, oil price movements and USD demand could continue to influence CAD.
Australian dollar (AUD) climbs on positive data
The Australian dollar (AUD) was volatile last night, initially slipping before immediately regaining strength. Higher Australian consumer inflation expectations and mostly upbeat jobs data boosted the ‘Aussie’.
New Zealand dollar (NZD) subdued in wake of RBNZ decision
The New Zealand dollar (NZD) remained muted last night, with NZD licking its wounds following the Reserve Bank of New Zealand’s (RBNZ) surprise rate cut the night before.