Pound (GBP) undermined by UK fiscal challenges
The pound (GBP) struggled to attract support yesterday, amid the anxiety surrounding Chancellor Rachel Reeves’s autumn budget.
These concerns were compounded by calls for the Chancellor to resign for breaking rules in relation to the renting out of her South London home.
UK economic data remains in short supply today, which may keep the focus on the UK’s fiscal woes, leaving the pound vulnerable to further pressure.
Euro (EUR) muted despite upbeat GDP and ECB rate hold
The euro (EUR) was subdued on Thursday, with the single currency weighed down by its negative correlation with the US dollar (USD).
While preliminary GDP figures for the third quarter showed growth in the Eurozone economy outpaced expectations and the European Central Bank (ECB) left interest rates on hold again, EUR exchange rates remain beholden to the movement of its peers.
The spotlight today will be on the Eurozone’s latest inflation print. A small moderation of inflation this month could apply some modest pressure to the euro as it may underpin bets for one more rate cut from the ECB next year.
US dollar (USD) bolstered by hawkish Fed
The US dollar appreciated yesterday as it continued to benefit from a hawkish repricing of Federal Reserve interest rate expectations in the wake of Wednesday’s policy announcement.
While the Fed cut rates as expected, Fed Chair Jerome Powell noted that another cut in December is ‘not a forgone conclusion’.
Looking ahead, USD investors will look to speeches by several members of the Fed for fresh impetus today. Could a hawkish consensus propel the US dollar higher?
Canadian dollar (CAD) slides as oil prices soften
The commodity-linked Canadian dollar (CAD) trended lower on Thursday in response to falling oil prices.
Canada’s latest GDP figures may place additional pressure on the ‘loonie’ today as month-on-month growth is forecast to have contracted in September.
Australian dollar (AUD) stumbles despite rising PPI
The Australian dollar (AUD) trended overnight on Thursday as souring risk appetite overshadowed a stronger-than-expected rise in producer price inflation in the third quarter.
New Zealand dollar (NZD) slides in risk-off trade
The New Zealand dollar (NZD) also retreated in overnight trade as the cautious market mood weakened the appeal of the ‘kiwi’.
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