Pound (GBP) undermined by ‘Trump trade’
The pound (GBP) found itself on the back foot yesterday amid ongoing fears that Donald Trump’s proposed trade tariffs will be harmful to the UK economy.
Meanwhile, a lack of British data meant Sterling struggled to find support.
Sterling has started today’s session on a sour note after UK GDP printed below expectations. Growth slowed from 0.5% to just 0.1% in the third quarter, raising concerns about the country’s economic trajectory.
Euro (EUR) pressured amid EU-US trade war fears
The euro (EUR) also suffered in the aftermath of Trump’s election victory, as tariffs could lead to a damaging EU-US trade war.
Furthermore, a larger-than-expected decline in Eurozone industrial production put pressure on EUR, although disagreement among European Central Bank (ECB) policymakers over the pace of interest rate cuts seemed to cushion the common currency.
In the absence of more impactful data today, Germany’s latest wholesale prices release may affect EUR. Could the uptick in prices last month boost the euro?
US dollar (USD) extends gains as Republicans hold the House
The US dollar (USD) continued its recent rally yesterday after confirmation that the Republican Party secured a majority in the House of Representatives, with the GOP now controlling both chambers of Congress.
This paves the way for President-Elect Donald Trump to push through policies that many believe will lead to higher inflation and therefore force the Federal Reserve to deliver fewer rate cuts.
This afternoon, the latest US retail sales figure could lend USD further support, if we see another expansion in domestic sales growth last month.
Canadian dollar (CAD) boosted by rising oil prices
The oil-sensitive Canadian dollar (CAD) climbed yesterday, as rising crude prices boosted demand for the ‘loonie’.
Oil price dynamics may drive CAD exchange rates again today. If prices continue to tick higher, so could the Canadian dollar.
Australian dollar (AUD) firms as USD retreats
The Australian dollar (AUD) crawled up from recent lows last night as a pullback in the US dollar gave the ‘Aussie’ a chance to recover.
New Zealand dollar (NZD) buoyed despite weak PMI
Likewise, the New Zealand dollar (NZD) was able to post modest gains overnight, despite a deeper-than-forecast contraction in the New Zealand manufacturing PMI for October.