Pound (GBP) dips as UK growth outlook dims
The pound (GBP) weakened on Monday after the Organisation for Economic Co-operation and Development (OECD) slashed its 2025 UK growth forecast.
This reignited concerns over the UK’s economic trajectory and fuelled speculation that Chancellor Rachel Reeves may outline spending cuts in next week’s Spring Statement.
With no major UK economic data scheduled for release, broader market sentiment may dictate GBP movement today.
Euro (EUR) gains on Ukraine peace talk optimism
The euro (EUR) strengthened at the start of the week, supported by cautious optimism over potential Ukraine peace talks between US President Donald Trump and Russian President Vladimir Putin.
The euro also benefited from its inverse relationship with the US dollar (USD), which faced pressure on Monday.
Today, investors will be focused on Germany’s latest ZEW economic sentiment index. If the country’s increased defence and infrastructure spending has lifted sentiment, the euro may continue to climb.
US dollar (USD) struggles as retail sales disappoint
The US dollar remained on the back foot at the start of this week after the latest US retail sales data failed to meet forecasts.
The weaker-than-expected recovery in consumer spending reinforced concerns that the US economy may tip into recession in the first half of the year.
Looking ahead, USD movement may be muted today as investors await the Federal Reserve’s interest rate decision on Wednesday.
Canadian dollar (CAD) supported by rising oil prices
The Canadian dollar (CAD) saw broad gains on Monday as a rise in oil prices bolstered the appeal of the commodity-linked currency.
Canada’s latest consumer price index is due for release today. If February’s inflation report points to an acceleration, it could reduce expectations for Bank of Canada (BoC) rate cuts and further support the ‘loonie’.
Australian dollar (AUD) pressured by geopolitical uncertainty
The Australian dollar (AUD) stumbled overnight, as escalating tensions in the Middle East prompted investors to pull away from risk-sensitive assets like the ‘Aussie’.
New Zealand dollar (NZD) weakens amid risk-off sentiment
The New Zealand dollar (NZD) also faced selling pressure in overnight trade, as the negative shift in risk sentiment weighed on the ‘kiwi’.
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