Pound (GBP) slides as fiscal worries persist
The pound (GBP) remained under pressure yesterday, with GBP/EUR tumbling to its lowest level in almost two and a half years, as investors grew increasingly anxious ahead of Chancellor Rachel Reeves’s autumn budget.
Sterling’s decline was compounded by expectations that the mounting challenges facing the UK economy could push the Bank of England (BoE) towards another interest rate cut before the end of the year.
With few UK domestic data releases scheduled today, these fiscal and monetary factors may continue to drag on the pound.
Euro (EUR) softens as risk appetite improves
The euro (EUR) lost ground against many of its peers yesterday, as improved risk sentiment and a lack of new Eurozone data left the typically safer single currency on the back foot.
EUR also struggled to attract support ahead of today’s Eurozone GDP figures, which are expected to show that growth remained virtually flat in the third quarter.
Should the data confirm that the bloc’s economy has stagnated, the euro may weaken further. In addition, the European Central Bank (ECB) is due to deliver its latest interest rate decision later today, which could inject additional volatility into EUR exchange rates.
US dollar (USD) regains strength after Fed comments
The safe-haven US dollar (USD) initially dipped yesterday as an upbeat market mood curbed demand for the currency.
However, the ‘greenback’ rebounded later in the session after the Federal Reserve’s policy announcement. While the central bank did opt to cut rates as expected, Fed Chair Jerome Powell cautioned that another reduction in December was not a ‘forgone conclusion’.
The US dollar could continue to draw support today from Powell’s remarks, particularly with no significant US data on the calendar, while global risk trends may further steer USD movement.
Canadian dollar (CAD) climbs as BoC hints at policy pause
The Canadian dollar (CAD) strengthened yesterday, even as the Bank of Canada (BoC) implemented an anticipated 25-basis-point rate cut. The currency gained ground after policymakers suggested that rates may now be at a neutral level.
This could continue to underpin CAD today, although oil prices may also influence the commodity-linked ‘loonie’, with a recent decline potentially weighing on the currency.
Australian dollar (AUD) steady amid mixed market mood
The Australian dollar (AUD) traded without clear direction overnight, as investors weighed the implications of the Federal Reserve’s hawkish stance alongside signs of improving US-China trade relations.
New Zealand dollar (NZD) rangebound despite upbeat survey
The New Zealand dollar (NZD) was little moved overnight, with a stronger-than-expected rebound in business confidence for October failing to spark a significant upside for the ‘kiwi’.
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