Pound (GBP) holds firm after upbeat data
The pound (GBP) steadied at the end of last week, supported by a series of stronger-than-expected UK economic reports.
Robust retail sales and PMI figures helped ease speculation that the Bank of England (BoE) could move to cut interest rates in December.
Looking ahead, the Confederation of British Industry (CBI) is set to publish its latest distributive trades survey early this week. Should the data indicate a further slowdown in retail activity, Sterling may come under renewed pressure.
Euro (EUR) edges higher amid softer USD
The euro (EUR) finished last week with modest gains, benefitting from weakness in the US dollar (USD) and its negative correlation with the ‘greenback’.
The single currency also found support from encouraging Eurozone PMI results, which showed the region’s sharpest pace of private sector growth since May 2024.
Today, markets will focus on Germany’s latest IFO business climate index. If sentiment deteriorates again, the euro could lose momentum.
US dollar (USD) weakens as inflation underwhelms
The US dollar stumbled on Friday following the release of the latest US CPI figures, which revealed slower-than-expected headline inflation and an unexpected dip in the core measure.
The softer inflation report has undermined USD demand, reinforcing expectations that the Federal Reserve may deliver another 50bps of rate cuts before the end of 2025.
At the start of this week, traders are likely to adopt a cautious stance ahead of Wednesday’s crucial Fed interest rate announcement.
Canadian dollar (CAD) tumbles as trade tensions rise
The Canadian dollar (CAD) slumped on Friday after US President Donald Trump abruptly announced the suspension of all trade talks with Canada, following a Canadian TV advert critical of his tariff policies.
If diplomatic strains between the two nations continue to intensify, the ‘loonie’ could remain on the back foot in the coming days.
Australian dollar (AUD) rallies on trade breakthrough hopes
The Australian dollar (AUD) surged higher during Monday’s Asian session after reports that the US and China had reached a preliminary ‘framework’ for a trade agreement ahead of a meeting between Presidents Donald Trump and Xi Jinping.
New Zealand dollar (NZD) climbs amid improved risk appetite
The New Zealand dollar (NZD) also advanced overnight, lifted by a renewed sense of optimism in global markets as US-China trade tensions eased.
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