Pound (GBP) firms in spite of UK borrowing concerns
The pound (GBP) ticked higher on Wednesday, despite data showing that UK government borrowing was twice as high as expected last month.
The disappointing borrowing figures raised concerns that Chancellor Rachel Reeves may raise taxes and cut spending when she delivers her first budget in October.
In the meantime, the UK’s latest PMIs may drive movement in the pound today. Expect to see Sterling strengthen if UK service sector growth accelerated as expected this month.
Euro (EUR) muted amid lull in data
The euro (EUR) was initially directionless yesterday, amid a lull in notable Eurozone economic data.
However, the single currency’s negative correlation with the US dollar (USD) then offered some support to EUR through the afternoon.
Coming up, the Eurozone will also release its latest PMI figures this morning, with EUR exchange rates poised to soften if they report the bloc’s private sector all but stalled in August.
US dollar (USD) weakens on weak US labour figures
The US dollar continued to retreat through Wednesday’s session, with the currency’s losses initially being triggered by a startling downwards revision to US non farm payrolls between April 2023 and March 2024.
The release of minutes from the Federal Reserve’s latest policy meeting then caused the ‘greenback’ to extend these losses as they strongly hinted at a September interest rate cut.
Looking ahead, movement in the US dollar may be limited through today’s session as USD investors brace for the start of the Fed’s annual Jackson Hole symposium later this afternoon.
Canadian dollar (CAD) muted as oil prices stall
The Canadian dollar (CAD) was trapped in a narrow range yesterday as a stalling of oil prices limited demand for the commodity-linked currency.
The ‘loonie’ is likely to continue to trade in relation to oil price movements today, potentially leaving the currency sidelined if prices remain flat.
Australian dollar (AUD) slips despite stronger-than-expected PMIs
The Australian dollar (AUD) trended broadly lower overnight on Wednesday as a cautious market mood offset stronger-than-expected PMIs which showed Australia’s private sector returned to growth in August.
New Zealand dollar (NZD) undermined by risk-off flows
The New Zealand dollar (NZD) also struggled in the face of souring market sentiment, which left the ‘kiwi’ muted in overnight trade.