Pound (GBP) steady despite UK inflation surge
The pound (GBP) was mostly rangebound on Wednesday, with investors showing little reaction to a sharp rise in UK inflation.
While the inflation data erased any lingering speculation of an imminent Bank of England (BoE) rate cut, concerns lingered over how persistent price pressures could hinder the UK’s economic outlook.
Today’s focus shifts to the BoE’s final policy meeting of the year. With no changes to interest rates expected, Sterling’s movement will likely be driven by the bank’s outlook for 2025.
Euro (EUR) slides on USD strength
The euro (EUR) was initially subdued on Wednesday, after Eurozone inflation in November was revised lower.
The single currency then came under notable selling pressure later in the session as a result of strong negative correlation with the US dollar (USD).
In the absence of major Eurozone data releases, the euro may remain directionless through today’s session.
US dollar (USD) climbs as Fed strikes hawkish tone
The US dollar strengthened on Wednesday, following the Federal Reserve’s latest interest rate decision.
With the bank’s 25 basis-point rate cut widely priced in, the Fed’s hawkish forward guidance helped to bolster demand for the ‘greenback’.
Looking ahead, USD investors will also keep an eye on the finalised third-quarter US GDP figures, which could provide further support to the dollar if they surprise to the upside.
Canadian dollar (CAD) rises alongside oil prices
The Canadian dollar (CAD) appreciated on Wednesday, with its gains tied to a rebound in crude oil prices.
With Canadian economic data scarce, the ‘loonie’ is likely to remain sensitive to oil price trends. If crude continues to climb, CAD may extend its advance today.
Australian dollar (AUD) slips as sentiment sours
The Australian dollar (AUD) weakened in overnight trade on Wednesday as a shift towards risk-off sentiment weighed on the risk-sensitive ‘Aussie’.
New Zealand dollar (NZD) plunges on GDP contraction
The New Zealand dollar (NZD) tumbled overnight, following the release of dismal domestic GDP figures. The data revealed a 1% contraction in third-quarter growth, confirming that New Zealand slipped into a technical recession over the summer.
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