Pound (GBP) recovery capped by budget uncertainty
The pound (GBP) edged higher during Monday’s session, recouping part of the decline seen late last week.
Even so, Sterling’s advance was relatively restrained, as traders remained wary about what Chancellor Rachel Reeves may unveil in her forthcoming budget.
On Tuesday, GBP movement may be driven by comments from Bank of England (BoE) policymaker Swati Dhingra. As one of the committee’s most dovish voices, any mention of monetary policy could act as a drag on Sterling.
Euro (EUR) unable to benefit from upgraded growth outlook
The euro (EUR) found little support at the start of the week, with its inverse relationship to the US Dollar (USD) overshadowing an upgrade to the Eurozone’s economic projections from the European Commission.
The EC lifted its 2025 growth outlook from 0.9% to 1.3%, though it noted the improvement was largely due to a temporary rise in demand as exports surged ahead of US tariff changes.
With major Eurozone releases absent today, the euro may drift without a clear sense of direction.
US dollar (USD) strengthens on renewed Fed tightening expectations
The US dollar began the week on firm footing as markets continued to scale back expectations for a Federal Reserve rate cut, with the likelihood of December easing slipping to just 44%.
A broadly risk-off tone also lent support to the USD, as investors sought safer assets such as the ‘Greenback’.
Looking ahead, the upcoming ADP employment report could pull the US dollar lower if figures for late October show a further cooling in the US jobs market.
Canadian dollar (CAD) softens as inflation eases
The Canadian dollar (CAD) weakened slightly on Monday as a slowdown in domestic inflation increased speculation of another rate cut from the Bank of Canada (BoC).
Shifts in oil prices are likely to steer the ‘loonie’ through today’s session, with further declines in crude likely to exert additional pressure on CAD exchange rates.
Australian dollar (AUD) weakens as RBA hints at scope for easing
The Australian dollar (AUD) remained subdued overnight after minutes from the Reserve Bank of Australia’s (RBA) latest meeting showed policymakers expect interest rates to stay elevated for some time, while leaving the door open to a potential cut if economic growth deteriorates.
New Zealand dollar (NZD) fluctuates in uneven trading
The New Zealand dollar (NZD) traded in a choppy fashion overnight, initially slipping before recovering its losses as risk appetite improved across markets.
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