Pound (GBP) struggles for direction after BoE comments
The pound (GBP) traded without a clear direction on Thursday following mixed signals from Bank of England (BoE) Governor Andrew Bailey.
Bailey noted signs of slack emerging in the UK labour market, yet also suggested the National Insurance rise may be adding upward pressure to consumer prices.
With no key UK data on the docket today, Sterling may continue to drift as the week draws to a close.
Euro (EUR) gains as USD weakens
The euro (EUR) pushed higher yesterday, benefitting from the US dollar’s (USD) broad selloff despite some uninspiring German data.
A surprise fall in German consumer confidence was largely overlooked by EUR investors as the euro’s inverse relationship with a falling USD helped drive gains.
Turning to today, the Eurozone’s latest economic sentiment index could weigh on the currency. June’s data showed an unexpected decline.
US dollar (USD) slumps on Fed uncertainty
The US dollar dropped to a new three-year low on Thursday amid concerns over the future independence of the Federal Reserve, as reports that Donald Trump may seek to name a replacement for Fed Chair Jerome Powell early raised alarm among USD investors.
Further downside came as finalised Q1 GDP data showed the US economy shrank by a steeper 0.5%, reinforcing recession fears.
Today’s core PCE price index – the Fed’s preferred inflation gauge – is in focus. A forecast rise in inflation could reduce interest rate cut bets and lend the ‘greenback’ some support.
Canadian dollar (CAD) supported by oil recovery
The commodity-linked Canadian dollar (CAD) firmed yesterday, buoyed by a rebound in crude oil prices.
Attention now turns to Canada’s latest GDP data. If the economy shrank in April as forecast, the ‘loonie’ could face headwinds.
Australian dollar (AUD) drifts on lack of data
The Australian dollar (AUD) remained subdued overnight, with a data-light calendar and mixed risk appetite offering little direction.
New Zealand dollar (NZD) strengthens on upbeat data
The New Zealand dollar (NZD) ticked higher last night as local consumer confidence unexpectedly rose to a six-month high, bolstering NZD sentiment.
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