Pound (GBP) tumbles amid signs of labour market weakness
The pound (GBP) fell sharply on Tuesday as fresh evidence of a cooling UK labour market fuelled speculation that the Bank of England (BoE) could deliver another interest rate cut in 2025.
The latest labour market report revealed that unemployment climbed to a four-year high in the three months to August, while regular pay growth moderated – both signs of slackening demand for workers.
Looking ahead, speeches from BoE Deputy Governors Dave Ramsden and Sarah Breeden are due today. If either policymaker voices concern over the jobs data, Sterling may extend its losses.
Euro (EUR) strengthens as German sentiment improves
The euro (EUR) gained ground against weaker peers yesterday, buoyed by a cautious mood in markets and an improvement in German economic sentiment.
The ZEW economic sentiment index rose from 37.3 to 39.3 in August. Although this missed forecasts of 40.5, it still offered support to the single currency.
Today, however, the euro could face pressure if Eurozone industrial production figures confirm expectations of a 1.5% slump in August.
US dollar (USD) pares gains after risk-driven rally
The US dollar (USD) initially advanced on Tuesday as investors sought shelter in the safe-haven currency amid souring risk appetite, driven by intensifying US-China trade tensions and the IMF’s gloomy global growth outlook.
However, the ‘greenback’ later surrendered much of its earlier gains as unease over the trade dispute and the ongoing US government shutdown unsettled markets.
Looking forward, a series of speeches from Federal Reserve policymakers – including Trump ally Stephen Miran – could influence USD direction this evening. Any dovish signals may weigh on the currency.
Canadian dollar (CAD) trades mixed amid oil and USD movements
The Canadian dollar (CAD) edged higher against weaker counterparts on Tuesday, supported by its positive link to the US dollar. However, a decline in oil prices saw the currency weaken against stronger peers.
With little domestic data on the docket, CAD is likely to remain tied to crude price fluctuations through today’s session.
Australian dollar (AUD) lifts as RBA hints at sticky inflation
The Australian dollar (AUD) strengthened overnight after Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter cautioned that inflation is likely to come in hotter than expected in the third quarter, reducing prospects of near-term rate cuts.
New Zealand dollar (NZD) steady despite firmer risk tone
The New Zealand dollar (NZD) traded in a narrow range overnight, with the ‘kiwi’ struggling to capitalise on the slight improvement in market sentiment.
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