Pound (GBP) subdued amid BoE rate cut speculation
The pound (GBP) weakened at the end of last week as speculation grew that the Bank of England (BoE) could deliver a surprise interest rate cut at its upcoming meeting.
Analysts at Barclays and Goldman Sachs both warned that markets may be underestimating the likelihood of such a move, arguing that the decision is likely to be more finely balanced than investors currently expect.
Sterling may open this week on a softer footing if traders continue to reassess the odds of a near-term rate reduction.
Euro (EUR) edges lower as inflation eases
The euro (EUR) slipped on Friday as Eurozone inflation eased from 2.2% to 2.1% in October.
Although the slowdown was minimal, it was enough to prompt a slight dovish shift in European Central Bank (ECB) interest rate expectations.
At the start of this week, a lack of market-moving Eurozone data is likely to leave EUR to trade on wider market trends.
US dollar (USD) rallies on hawkish Fed tone
The US dollar (USD) extended its gains at the end of last week, sustaining the bullish momentum sparked by the Federal Reserve’s latest policy decision.
Investors continued to pare back bets on a December rate cut after hawkish comments from Fed Chair Jerome Powell, who said that a December cut was ‘not a forgone conclusion’.
The ISM manufacturing PMI is set to be closely watched this week. Should the index confirm that US factory activity returned to growth in October, the US dollar could climb further.
Canadian dollar (CAD) steady amid mixed growth figures
The Canadian dollar (CAD) was rangebound on Friday following the release of mixed GDP data. While preliminary estimates pointed to an unexpected rise in output for September, August’s reading was revised down from 0% to a 0.3% contraction.
A speech from Bank of Canada (BoC) Governor Tiff Macklem could provide fresh direction this week. If Macklem maintains the hawkish tone seen after the BoC’s recent policy decision, the ‘loonie’ may strengthen.
Australian dollar (AUD) supported by risk appetite
The Australian dollar (AUD) started the week on firmer ground, with a buoyant market mood boosting demand for risk-sensitive assets.
New Zealand dollar (NZD) lacks traction despite upbeat sentiment
The New Zealand dollar (NZD) traded without clear direction at the start of the week, struggling to benefit from the broadly positive risk environment as investors awaited fresh domestic catalysts.
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