Pound (GBP) steady as BoE decision looms
The pound (GBP) struggled for direction on Tuesday as investors held off on making any major moves ahead of the Bank of England’s (BoE) interest rate decision on Thursday.
While a 25 basis point rate cut is widely expected, speculation remains over how the BoE will frame its outlook on future monetary policy.
Sterling may remain in a tight range today as markets continue to tread cautiously in anticipation of the BoE’s upcoming decision.
Euro (EUR) gains as tariff concerns ease
The euro (EUR) ticked higher on Tuesday, buoyed by hopes that Donald Trump’s latest tariff threats against the EU may not materialise.
This optimism was fuelled by Trump’s last-minute decision to delay tariffs on Mexico and Canada, suggesting his trade stance may be more flexible than initially feared.
Looking ahead, the Eurozone’s latest producer price index is due for release today. A weaker-than-expected reading for December could put pressure on the euro.
US dollar (USD) fluctuates amid shifting trade rhetoric
The US dollar (USD) was choppy through Tuesday’s session as markets reacted to Trump’s evolving position on tariffs.
USD exchange rates then faced additional headwinds later in the day as the latest US job openings and labor turnover survey pointed to a cooling labour market.
The US dollar could remain under pressure today if the latest ADP employment report also signals a slowdown in job creation.
Canadian dollar (CAD) strengthens on tariff relief
The Canadian dollar (CAD) advanced on Tuesday as markets welcomed Trump’s decision to delay imposing tariffs on Canadian goods.
However, further gains for the ‘loonie’ could be limited today, with movement likely dictated by oil price fluctuations. If crude prices continue to fall, CAD may face fresh selling pressure.
Australian dollar (AUD) flat as Chinese data disappoints
The Australian dollar (AUD) remained rangebound overnight as a weaker-than-expected Chinese services PMI weighed on sentiment.
New Zealand dollar (NZD) directionless amid cautious trade
The New Zealand dollar (NZD) also struggled for momentum in overnight trade as a subdued market mood left risk-sensitive assets in limbo.
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