Pound (GBP) plunges as BoE delivers dovish rate cut
The pound (GBP) fell sharply on Thursday after the Bank of England (BoE) delivered a 25 basis point interest rate cut.
Although the move was widely expected, Sterling weakened as investors were rattled by the unexpectedly dovish split within the Monetary Policy Committee and the BoE’s drastic downgrade of its 2025 UK growth forecast.
BoE Chief Economist Huw Pill is due to speak today. If he pushes back against expectations for further rate cuts, the pound could stage a recovery.
Euro (EUR) struggles despite upbeat German data
The euro (EUR) remained rangebound on Thursday, with support coming from a much stronger-than-expected recovery in German factory orders in December.
However, EUR gains were ultimately limited due to the single currency’s strong inverse correlation with a strengthening US dollar (USD).
Germany’s latest industrial production figures were published this morning, and with factory output slumping far more than expected at the end of 2024, the euro may face further pressure today.
US dollar (USD) strengthens amid risk aversion
The US dollar (USD) climbed on Thursday as a deterioration in market sentiment drove demand for safe-haven assets.
However, the upside was curtailed after the latest US initial jobless claims report revealed a larger-than-forecast rise in unemployment claims at the start of February.
Attention now turns to today’s US non-farm payrolls. A solid employment report for January could see USD exchange rates push higher.
Canadian dollar (CAD) supported by oil price rebound
The Canadian dollar (CAD) inched higher on Thursday, benefitting from a modest uptick in oil prices.
However, the ‘loonie’ may face headwinds later today, as an expected increase in domestic unemployment could reinforce Bank of Canada (BoC) rate cut expectations.
Australian dollar (AUD) steady amid market caution
The Australian dollar (AUD) moved sideways overnight as traders remained cautious ahead of today’s key US employment data.
New Zealand dollar (NZD) drifts in mixed trade
The New Zealand dollar (NZD) was rangebound overnight as investors reacted to an uneven market mood heading into the weekend.