Pound (GBP) struggles to hold on to inflation-driven boost
The pound (GBP) opened yesterday on a firmer footing after UK inflation came in above forecasts, easing expectations for Bank of England (BoE) interest rate cuts.
However, these gains faded as the day went on, with investors fretting that persistently high borrowing costs could pressure the government into announcing tax increases later this year.
Looking ahead, fresh data shows the UK borrowed less than anticipated in July. If this is coupled with resilient activity in the services sector when the latest PMI figures land this morning, the pound could regain some support.
Euro (EUR) lifted by peace deal optimism
The euro (EUR) pushed higher on Tuesday, supported by renewed optimism around a potential Russia-Ukraine peace framework.
Sentiment improved after US President Donald Trump suggested Washington might offer air support as part of a wider postwar plan.
Today, the latest Eurozone PMI data revealed a broad improvement in business activity, driven by an unexpected rebound in manufacturing. This uptick could provide the common currency with further support as today’s session unfolds.
US dollar (USD) weighed down by Fed uncertainty
The US dollar (USD) traded without a clear direction yesterday as risk sentiment shifted throughout the session.
At the same time, the dollar was kept in check by caution ahead of the Federal Reserve’s latest meeting minutes and fresh criticism of the central bank from President Trump.
With the Jackson Hole Symposium kicking off today, the dollar may stay subdued, although the latest S&P Global PMIs and weekly jobless claims could generate movement.
Canadian dollar (CAD) underpinned by oil recovery
The Canadian dollar (CAD) advanced in step with rising crude prices yesterday, which lent strong support to the oil-linked currency.
With no notable domestic releases due, CAD will likely continue to track energy market developments today. Sustained oil price gains could give the ‘loonie’ additional momentum.
Australian dollar (AUD) pressured despite upbeat PMIs
The Australian dollar (AUD) weakened overnight, even as PMI readings surprised to the upside. A cautious mood in global markets curbed risk appetite, limiting the appeal of the AUD.
New Zealand dollar (NZD) dragged lower by trade miss
The New Zealand dollar (NZD) slipped during the Asian session after trade data revealed an unexpected July deficit, placing pressure on the currency.
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