Pound (GBP) supported by BoE expectations
The pound (GBP) ticked broadly higher through yesterday’s session, with GBP investors seemingly unfazed by Prime Minister Kier Starmer’s warning that the government’s Autumn Budget will be ‘painful’.
This upside in Sterling appeared to be supported by recent comments from Bank of England (BoE) Governor Andrew Bailey, which have further eased BoE interest rate cut expectations.
While UK data remains in short supply the pound may maintain a positive trajectory so long as investors continue to reprice their BoE rate cut bets.
Euro (EUR) dented by underwhelming German data
The euro (EUR) faced resistance on Tuesday as weak economic data from Germany highlighted the struggles facing the Eurozone’s largest economy.
The data included a surprise deterioration in consumer confidence heading into September as well as confirmation that the German economy shrank in the second quarter.
Looking ahead, Eurozone data is thin on the ground until the release of the latest German and Eurozone inflation figures in the second half of the week. Could this limit movement in the single currency today?
US dollar (USD) undermined by risk-on flows
The US dollar (USD) stumbled during yesterday’s session as a cautiously optimistic market mood limited demand for the safe-haven currency.
However, these losses were tempered slightly by a surprise uptick in the latest CB consumer confidence index.
A lull in US economic data today may see the US dollar remain sensitive to market risk dynamics today. If investors remain broadly upbeat, this may extend the recent USD selling bias.
Canadian dollar (CAD) muted as oil prices slide
The Canadian dollar (CAD) was subdued on Tuesday as a drop in oil prices limited the appeal of the commodity-linked currency.
Coming up, the absence of any notable domestic data may leave movement in CAD exchange rates tied to oil prices, with the ‘loonie’ likely to struggle if prices continue to soften.
Australian dollar (AUD) buoyed by stronger-than-expected inflation
The Australian dollar (AUD) firmed overnight on Tuesday as Australia’s latest monthly inflation print surprised to the upside again in July.
New Zealand dollar (NZD) wavers amid mixed market mood
The New Zealand dollar (NZD) initially ticked higher in overnight trade, before coming under pressure as the mood began to sour towards the end of the Asian trading session.