Pound (GBP) pressured by budget uncertainty
The pound (GBP) limped into the weekend after reports suggested Chancellor Rachel Reeves had abandoned plans to increase income tax in her upcoming autumn budget.
The revelation rattled markets as it appeared to undermine the Chancellor’s fiscal credibility, though Sterling later recovered some ground after separate reports hinted the government’s fiscal shortfall may be smaller than initially feared.
With no notable UK data on the calendar today, speculation surrounding the budget is likely to remain the key catalyst for GBP volatility at the start of the week.
Euro (EUR) buoyed by cautious mood
The euro (EUR) inched higher on Friday as a shift towards safer assets offered support to the single currency.
Additional tailwinds came as the Eurozone’s latest GDP release confirmed the bloc expanded by 0.2% in the third quarter.
A lack of major Eurozone data today may leave the euro without a clear sense of direction.
US dollar (USD) finds fleeting gains on fading Fed rate cut bets
The US dollar (USD) strengthened at the end of last week after markets pared back expectations for a December Federal Reserve rate cut, with the odds dropping below 50%.
However, these gains faded later in the session as USD investors grew cautious ahead of a backlog of US economic releases delayed by the government shutdown.
Concerns that the upcoming data could disappoint and trigger a dovish shift in Fed expectations may act as a headwind for the US dollar early this week.
Canadian dollar (CAD) bolstered by rising oil prices
The Canadian dollar (CAD) ended last week on firmer footing, supported by a rise in oil prices after Ukrainian drone strikes hit a Russian facility.
Looking ahead, Canada’s latest CPI report could help extend CAD’s momentum if inflation proved sticky in October.
Australian dollar (AUD) dented by cautious market mood
The Australian dollar (AUD) softened at the start of the week, with renewed strength in the US dollar driving broader risk-off sentiment and weighing on the risk-sensitive currency.
New Zealand dollar (NZD) fluctuates on mixed PMIs
The New Zealand dollar (NZD) traded erratically during Monday’s Asian session as conflicting domestic PMI readings left the ‘kiwi’ lacking a clear direction.
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