Pound (GBP) mixed as BoE decision imminent
The pound (GBP) traded without a clear direction yesterday, with GBP investors reluctant to place aggressive bets ahead of the Bank of England’s (BoE) impending interest rate decision.
The UK’s latest consumer price index failed to prompt any decisive movement, with core inflation cooling more than expected but headline inflation remaining well above the BoE’s 2% target.
Today, all eyes are on the BoE’s policy announcement. A rate hold may not support the pound if it’s paired with dovish forward guidance, while a shock rate cut could see GBP slump.
Euro (EUR) propped up by softening USD
The euro (EUR) was mixed yesterday, although the single currency’s negative correlation with a falling US dollar (USD) provided it with some support.
Despite USD weakness, EUR struggled to gain ground as the Eurozone’s finalised CPI figures confirmed that inflation slipped below the European Central Bank’s (ECB) target last month.
ECB President Christine Lagarde is due to deliver a speech today. If she reaffirms the bank’s recent hawkish shift, the single currency could enjoy support.
US dollar (USD) rebounds following Fed decision
The US dollar weakened yesterday, trimming some of Tuesday’s gains, as the prospect of direct US involvement in the Israel-Iran war worried USD investors.
However, the ‘greenback’ rebounded following the Federal Reserve’s latest policy decision, as the bank revised up its interest rate projections and Fed Chair Jerome Powell said tariffs are likely to push prices higher this summer.
Looking forward, market risk appetite may drive USD today. If tensions in the Middle East keep investors anxious, the ‘greenback’ could climb.
Canadian dollar (CAD) dragged down by oil prices
The crude-linked Canadian dollar (CAD) trended broadly lower yesterday as weakening oil prices weighed on the commodity-linked ‘loonie’.
An expected improvement in Canada’s business barometer for June could support CAD today, although oil prices and USD movement may have more of an impact.
Australian dollar (AUD) slides as employment falls
The Australian dollar (AUD) fell sharply last night amid a risk-off mood and an unexpected decline in Australian employment.
New Zealand dollar (NZD) plunges amid risk aversion
The New Zealand dollar (NZD) plummeted last night amid the souring market mood, with stronger-than-forecast New Zealand GDP growth in the first quarter failing to lift the ‘kiwi’.
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