Pound (GBP) dips as retail outlook worsens
The pound (GBP) weakened on Thursday after the Confederation of British Industry’s (CBI) distributive trades survey delivered a disappointing reading.
The persistent contraction in retail activity reinforced worries about the UK’s fragile economic backdrop and the mounting hurdles facing Chancellor Rachel Reeves.
Sterling could remain on the back foot heading into the weekend, with a lack of fresh UK data releases unlikely to provide clear direction for the currency.
Euro (EUR) pressured by US dollar gains
The euro (EUR) lost ground yesterday, dragged lower by its inverse relationship with the strengthening US dollar (USD).
Losses for the single currency were capped, however, after Germany’s latest consumer climate report showed sentiment improving more than anticipated going into October.
Attention today will turn to a speech by European Central Bank (ECB) President Christine Lagarde. Should she signal a willingness to tighten further, the euro may find some support.
US dollar (USD) climbs on upbeat figures
The US dollar strengthened on Thursday as a series of stronger-than-expected data releases reduced speculation over aggressive Federal Reserve rate cuts.
The upside was driven by a higher second-quarter GDP revision, a surprise rebound in August’s durable goods orders, and a fall in weekly jobless claims.
Focus now shifts to the Fed’s preferred inflation gauge, the core PCE price index. If the index shows another acceleration, it could further rein in Fed easing bets and sustain USD strength.
Canadian dollar (CAD) benefits from USD link
The Canadian dollar (CAD) advanced on Thursday, with its correlation to a stronger US dollar helping to offset the drag from weaker oil prices.
Investors are eyeing Canada’s latest GDP report later today. Evidence that growth picked up in August after July’s rebound may help ease fears of a looming technical recession.
Australian dollar (AUD) weakens on risk-off mood
The Australian dollar (AUD) softened in overnight trade, as plans for new US tariffs under President Donald Trump dampened global risk sentiment.
New Zealand dollar (NZD) steady in cautious trading
The New Zealand dollar (NZD) was similarly subdued overnight, with the ‘kiwi’ weighed down by softer domestic consumer confidence and ongoing market caution.
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