Pound (GBP) dips amid BoE rate cut speculation
The pound (GBP) weakened throughout yesterday’s session as investors continued to price in further interest rate cuts from the Bank of England (BoE) this year.
However, Sterling showed resilience against concerns over US President Donald Trump’s latest tariffs, with markets largely dismissing the impact on the UK economy.
BoE Governor Andrew Bailey is set to speak later today. If he reinforces the dovish stance seen after last week’s policy meeting, the pound could face additional losses.
Euro (EUR) subdued following ECB concerns
The euro (EUR) struggled on Monday after a European Central Bank (ECB) official cautioned about the economic risks posed by Trump’s protectionist trade measures.
ECB Vice President Luis de Guindos warned that the latest tariffs could add uncertainty to the Eurozone economy and urged against escalating trade tensions between the EU and the US.
With no significant Eurozone data releases today, the euro may struggle for direction.
US dollar (USD) strengthens amid trade worries
The US dollar (USD) climbed at the start of the week as markets reacted to Trump’s latest tariff announcements.
Trump confirmed a 25% tariff on all steel and aluminium imports and threatened to impose reciprocal tariffs on countries levying duties on US exports.
Later today, Federal Reserve (Fed) Chair Jerome Powell will testify before Congress. If he suggests interest rates need to remain elevated due to persistent inflation, the US dollar could extend its gains.
Canadian dollar (CAD) pressured by trade concerns
The Canadian dollar (CAD) weakened on Monday, with investors fretting over the potential impact of Trump’s tariffs on Canada’s steel exports to the US.
However, further losses for the ‘loonie’ could be cushioned if oil prices continue to rise today.
Australian dollar (AUD) lifted by upbeat sentiment data
The Australian dollar (AUD) ticked higher overnight on Monday after Australia’s latest business and consumer confidence figures pointed to improving economic optimism.
New Zealand dollar (NZD) gains despite risk aversion
The New Zealand dollar (NZD) saw modest gains in overnight trade, managing to strengthen even as broader market sentiment remained risk-averse.