Pound (GBP) muted amid fiscal uncertainty
The pound (GBP) traded largely sideways on Thursday as the absence of fresh UK data left Sterling exposed to speculation ahead of the autumn budget.
Concerns linger that a sizeable shortfall in the government’s finances will compel Chancellor Rachel Reeves to announce either higher taxes or major spending cut in order to comply with her own fiscal rules.
In the meantime, the pound is under pressure this morning after the UK’s latest GDP release revealed growth stagnated on a monthly basis in July.
Euro (EUR) climbs as ECB maintains hawkish guidance
The euro (EUR) advanced yesterday following the European Central Bank’s (ECB) latest policy announcement.
As well as keeping rates unchanged in line with forecasts, the ECB raised its growth projection for 2025, while President Christine Lagarde noted that risks to the Eurozone outlook are now viewed as ‘more evenly balanced’.
With little major Eurozone data due today, euro trade is likely to be influenced by broader market sentiment.
US dollar (USD) steady despite stronger inflation
The US dollar (USD) held within a narrow band on Thursday, as investors brushed aside hotter-than-expected inflation data.
Although inflation accelerated to its fastest pace since January in August, USD investors continued to price in several Federal Reserve rate cuts across the rest of 2025, particularly amid a spike in new US jobless claims last week.
Looking to today’s session, the release of the latest US consumer sentiment index could weigh on the dollar if the survey points to declining household confidence.
Canadian dollar (CAD) pressured by falling oil
The Canadian dollar (CAD) weakened on Thursday as a dip in crude oil prices undermined demand for the commodity-sensitive currency.
With Canadian economic data thin on the ground today, CAD exchange rates are expected to remain closely linked to oil market movements.
Australian dollar (AUD) retreats as risk appetite fades
The Australian dollar (AUD) made initial gains overnight but lost momentum by the close of the Asian session as a downturn in market mood curbed demand for the risk-sensitive currency.
New Zealand dollar (NZD) softens on weak PMI
The New Zealand dollar (NZD) also slipped overnight after the latest manufacturing PMI revealed an unexpected contraction in factory activity last month.
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