Pound (GBP) buoyed by UK economic optimism
The pound (GBP) trended broadly higher yesterday, with Sterling sentiment strengthening amid UK economic optimism.
Markets hope that signs of a stronger economy, coupled with the perceived political stability of the new Labour government will help to encourage more investment in the UK.
The publication of the UK’s latest government borrowing figures may act drag on GBP exchange rates today as a larger-than-expected public deficit may lead to some tough decisions for Chancellor Rachel Reeves in her upcoming budget.
Euro (EUR) pressured by risk-on flows
The euro (EUR) ticked lower on Tuesday as demand for the safe-haven currency was limited by the prevailing risk-on sentiment.
This offset the release of the latest Eurozone consumer price index, which confirmed inflation in the bloc accelerated in July and raised fresh questions over a potential interest rate cut from the European Central Bank (ECB) next month.
Meanwhile, in the absence of any notable Eurozone economic data, the euro may struggle for direction today.
US dollar (USD) extends losses in bullish trade
The US dollar (USD) remained on the defensive through yesterday’s session, leading the currency to slip to new multi-month lows.
The USD selling bias remained firmly entrenched as Federal Reserve rate cut bets and the positive market mood limited the appeal of the safe-haven currency.
Looking ahead, the publication of the minutes from the Fed’s latest policy meeting will be in the spotlight for USD investors today as they look for more insight into how aggressively the US central bank will cut rates in the coming months.
Canadian dollar (CAD) dips as inflation cools
The Canadian dollar (CAD) weakened on Tuesday as a cooling of domestic inflation stoked bets for another interest rate cut from the Bank of Canada (BoC).
With Canadian data in short supply, movement in the ‘loonie’ today may be dictated by oil price dynamics. If oil prices continue to soften CAD exchange rates may come under additional pressure.
Australian dollar (AUD) wavers amid mixed mood
The Australian dollar (AUD) traded in a narrow range overnight on Tuesday as an uneven market mood led to a pause in AUD’s recent bullish run.
New Zealand dollar (NZD) dented as spending drops
The New Zealand dollar (NZD) edged lower overnight as NZD investors were dismayed by another fall in domestic credit card spending in July.