Pound (GBP) uneven amid wider market trends
The pound (GBP) struggled for direction on Wednesday, with the lack of fresh UK economic releases offering little clarity to investors.
This resulted in an inconsistent showing for Sterling, which gained on some softer currencies but tumbled to a fresh two-month low against the US dollar (USD).
With no major domestic data due again today, the pound may continue to drift without a clear catalyst.
Euro (EUR) slides as Eurozone economy slows to a crawl
The euro (EUR) fell yesterday, following the release of GDP data showing the Eurozone’s growth almost ground to a halt in the second quarter, expanding just 0.1%.
Although the result narrowly beat expectations, it added pressure on the European Central Bank (ECB) to act in support of the bloc’s weak economy.
Looking ahead, Germany’s latest inflation figures could place further pressure on the euro, with projections suggesting CPI fell below the ECB’s 2% target in July.
US dollar (USD) extends gains on hawkish Fed rate decision
The US dollar remained in demand on Wednesday, bolstered initially by upbeat GDP data that indicated a stronger recovery in the US economy.
These gains were reinforced following the Federal Reserve’s interest rate announcement, where the bank opted to hold rates steady, and Fed Chair Jerome Powell signalled a willingness to maintain a tighter policy stance.
Markets will now turn their attention to June’s core PCE price index, with the Fed preferred indicator for inflation potentially fuelling further USD strength if it aligns with the bank’s hawkish tone.
Canadian dollar (CAD) firms as BoC leaves rates on hold
The Canadian dollar (CAD) advanced yesterday, as the Bank of Canada (BoC) left interest rates unchanged, providing support for the ‘loonie’.
However, CAD may face a setback depending on today’s GDP release. If Canadian growth contracted again in June as anticipated, the currency’s momentum could stall.
Australian dollar (AUD) rebounds on impressive retail data
The Australian dollar (AUD) edged higher overnight, lifted by stronger-than-expected domestic retail sales, which helped reverse some of its earlier losses.
New Zealand dollar (NZD) buoyed by positive risk flows
The New Zealand dollar (NZD) gained ground in overnight trade, as improved market sentiment gave the risk-sensitive currency a boost.
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