Pound (GBP) struggles as BoE rate cut speculation builds
The pound (GBP) faced headwinds yesterday as expectations for a Bank of England (BoE) interest rate cut next month gained momentum.
While the potential for rate cuts helped stabilise Sterling during last week’s UK bond market turmoil, calmer market conditions have since left the currency exposed to renewed selling pressure.
This morning, the UK’s latest jobs report offered mixed signals. An uptick in wage growth was welcomed by GBP investors, but Sterling weakened as unemployment rose in November.
Euro (EUR) climbs amid US dollar softness
The euro (EUR) advanced on Monday, largely benefiting from its strong negative correlation with the US dollar (USD).
This upward movement came despite mounting speculation of interest rate cuts from the European Central Bank (ECB).
Later today, Germany’s ZEW economic sentiment index will be released. If the data shows continued improvement in business morale, the euro could see additional gains.
US dollar (USD) sinks as Trump returns to office
The US dollar weakened sharply at the start of the week as investors moved to lock in profits ahead of Donald Trump’s inauguration, following reports he would delay implementing tariffs on his first day in office.
These losses were amplified by reduced market activity, as US markets were closed for Martin Luther King Jr. Day.
Looking ahead, USD investors will closely monitor Trump’s initial moves, with his policy agenda likely to inject further volatility into the dollar.
Canadian dollar (CAD) dips as oil prices slide
The Canadian dollar (CAD) lost ground on Monday, weighed down by the impact of falling crude oil prices on the commodity-tied currency.
Attention now turns to Canada’s upcoming consumer price index. If inflation cools as forecast, it may bolster expectations of Bank of Canada (BoC) rate cuts, putting additional pressure on the ‘loonie’.
Australian dollar (AUD) falls on tariff concerns
The Australian dollar (AUD) weakened overnight on Monday as Donald Trump unsettled markets by suggesting potential tariffs on imports from China, Mexico, and Canada.
New Zealand dollar (NZD) slides on poor PMI data
The New Zealand dollar (NZD) was also under pressure in overnight trade after New Zealand’s latest PMI data revealed private sector activity contracted for the tenth consecutive month in December.
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