Pound (GBP) struggles as UK services PMI disappoints
The pound (GBP) was subdued on Wednesday as markets reacted to the UK’s latest services PMI release.
January’s finalised figures saw the crucial services sector revised lower, stoking concerns that the UK economy may be heading for a period of stagflation.
Looking ahead, the Bank of England (BoE) is set to announce its latest interest rate decision today. With a 25bps rate cut largely priced in, the pound’s movement will likely hinge on the BoE’s forward guidance.
Euro (EUR) gains as US dollar weakens
The euro (EUR) ticked higher on Wednesday, benefiting from its strong negative correlation with the US dollar (USD).
However, these gains were capped by lingering concerns over the health of the Eurozone economy, as fears mount that new energy market disruptions could weigh on growth.
Germany’s latest factory orders data is due out today. If order growth rebounded at the end of 2024, it could help the euro extend its recent recovery.
US dollar (USD) weakens as trade tensions ease
The US dollar (USD) softened on Wednesday as fading concerns over Donald Trump’s tariff threats dampened demand for safe-haven assets.
Further weighing on USD was the latest ISM services PMI, which revealed a sharper-than-expected slowdown in the US services sector.
Unless Trump reignites trade war fears, the US dollar may remain subdued today as investors look ahead to key US employment data due later in the week.
Canadian dollar (CAD) pressured by falling oil prices
The Canadian dollar (CAD) faced resistance on Wednesday as weaker oil prices reduced demand for the commodity-linked currency.
Should oil prices continue to slide, the ‘loonie’ may struggle to find support through today’s session.
Australian dollar (AUD) slides as trade surplus narrows
The Australian dollar (AUD) drifted lower overnight as data showed Australia’s trade surplus shrank to a three-month low in December, following a marked slowdown in exports.
New Zealand dollar (NZD) dips amid cautious sentiment
The New Zealand dollar (NZD) also lost ground in overnight trade as a subdued market mood curbed demand for the risk-sensitive ‘kiwi’.
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