Pound (GBP) falters despite BoE’s hawkish stance
The pound (GBP) initially strengthened yesterday, as optimism over Germany’s new debt brake agreement sparked hopes of positive economic spillover for the UK.
However, Sterling’s gains quickly faded, even as comments from Bank of England (BoE) policymakers struck a more hawkish tone.
With no key UK data releases scheduled today, the pound may struggle to find a clear direction.
Euro (EUR) climbs on German fiscal boost
The euro (EUR) rallied on Wednesday after Germany’s prospective coalition partners reached a deal to ease the country’s debt brake.
Markets are hopeful this will free up substantial funds for defence and infrastructure investment, potentially bolstering the Eurozone’s largest economy.
Looking ahead, the European Central Bank (ECB) will announce its latest interest rate decision this afternoon. If policymakers confirm plans for further rate cuts, the euro could surrender some of its recent gains.
US dollar (USD) weakens as recession jitters grow
The US dollar (USD) extended its losses on Wednesday after US President Donald Trump acknowledged his tariffs may cause ‘a little disturbance’.
His comments, alongside weaker-than-expected US jobs data, fuelled concerns about a possible recession and saw markets ramp up bets on a Federal Reserve rate cut in May.
If these concerns continue to dominate market sentiment today, the US dollar may remain on the defensive.
Canadian dollar (CAD) pressured by trade tensions
The Canadian dollar (CAD) struggled on Wednesday as ongoing US tariff uncertainty and another dip in oil prices weighed on the currency.
However, the ‘loonie’ could find some relief later today if the latest Ivey PMI indicates a return to growth in the Canadian economy last month.
Australian dollar (AUD) lifted by upbeat trade data
The Australian dollar (AUD) edged higher in overnight trade, as a larger-than-expected trade surplus for January helped support the ‘Aussie’.
New Zealand dollar (NZD) gains amid risk-on sentiment
The New Zealand dollar (NZD) also firmed overnight, benefiting from an improvement in risk appetite.
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