Pound (GBP) tumbles on fiscal concerns
The pound (GBP) fell to multi-month lows yesterday as growing unease over the upcoming autumn budget dragged on Sterling.
Reports that the Office for Budget Responsibility (OBR) is preparing to slash its productivity growth forecasts – a revision expected to create a £20bn shortfall in the public finances – have sparked fears that Chancellor Rachel Reeves will be forced to raise taxes even higher than anticipated in next month’s budget.
With no significant UK data releases due today, the focus is likely to remain on fiscal concerns. Continued speculation about tax hikes and weaker productivity could keep the pound under pressure.
Euro (EUR) subdued amid geopolitical tensions
The euro (EUR) struggled yesterday as renewed EU-Russia tensions weighed on the common currency.
The recent series of Russian airspace violations, cyberattacks and weapons tests unsettled investors, reviving concerns about wider European security risks stemming from the ongoing Russia-Ukraine conflict.
With little in the way of Eurozone data today, the euro may continue to drift without clear direction ahead of several major events tomorrow.
US dollar (USD) retreats as risk sentiment improves
The US dollar (USD) saw mixed trade yesterday before weakening later in the session as improving risk appetite sapped demand for the safe-haven currency.
News of constructive trade talks between the US and Brazil, Japan and China briefly lent support to USD, but the broader upbeat mood among investors ultimately undermined the US dollar’s appeal.
Attention now turns to the Federal Reserve’s policy decision this evening. A dovish rate cut could push the ‘greenback’ even lower.
Canadian dollar (CAD) gains on oil outlook
The Canadian dollar (CAD) firmed yesterday, even as oil prices dipped, amid speculation that fresh Western sanctions on Russian oil and ongoing Ukrainian strikes on refineries could lift crude prices in the months ahead.
Looking ahead, markets are bracing for the Bank of Canada’s (BoC) interest rate announcement later today. An expected 25bps cut may limit further CAD upside.
Australian dollar (AUD) surges after inflation surprise
The Australian dollar (AUD) rallied overnight after Australia’s third-quarter inflation accelerated from 2.1% to 3.2%, prompting investors to scale back bets on another near-term rate cut from the Reserve Bank of Australia (RBA).
New Zealand dollar (NZD) strengthens alongside AUD
The New Zealand dollar (NZD) rose in tandem with its Australian counterpart, supported by the improved market mood and the currencies’ strong positive correlation.
Never miss a movement. Create a free account with TorFX to get the latest currency news delivered straight to your inbox. You can also set up rate alerts and check live rates 24/7.