Pound (GBP) firms following UK spending review
The pound (GBP) trended higher yesterday, as GBP investors digested the UK government’s latest spending review.
While the review got a largely muted response from analysts, by not spooking the bond markets Chancellor Rachel Reeves’s spending plans can broadly be seen as a success.
Meanwhile, Sterling is off to a poor start this morning after the UK’s latest GDP figures reported a larger-than-expected contraction in growth at the start of the second quarter.
Euro (EUR) buoyed by USD weakness
The euro (EUR) rallied on Wednesday, as it was bolstered by its negative correlation with the US dollar (USD).
Supporting these gains were hopes that EU-US trade talks may now take priority for the Trump administration after it signed a new framework with China.
EUR investors will look to speeches by European Central Bank (ECB) policymakers for fresh impetus today, with a broadly hawkish consensus likely to offer support to the single currency.
US dollar (USD) slips on underwhelming inflation reading
The US dollar came under pressure yesterday after US inflation fell short of expectations in May, rising from 2.3% to 2.4%, against forecasts it would reach 2.5%.
The softer-than-expected reading triggered an immediate downturn in USD exchange rates as investors placed fresh bets on a Federal Reserve interest rate cut in July, although some of these losses were reversed by the end of the session.
Coming up, the ‘greenback’ may come under further pressure today, if producer price inflation also falls short of expectations.
Canadian dollar (CAD) underpinned by rising oil prices
The Canadian dollar (CAD) was stable on Wednesday, as it was supported by the continued appreciation of oil prices.
If energy prices continue to climb, it may help the ‘loonie’ to maintain a positive trajectory today.
Australian dollar (AUD) undermined by risk-off flows
The Australian dollar (AUD) faced headwinds during Thursday’s Asian trading session, with a mixed market mood infusing volatility into the risk-sensitive currency.
New Zealand dollar (NZD) fluctuates in mixed trade
The New Zealand dollar (NZD) also wavered in overnight trade in response to shifting market sentiment.
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