Pound (GBP) softens amid post-budget jitters
The pound (GBP) lost ground yesterday as lingering post-budget unease continued to dent demand for the currency.
Reports of friction between the Treasury and the Office for Budget Responsibility (OBR) – following the disorderly leaks and briefing chaos ahead of the autumn budget– unsettled GBP traders.
Later today, the UK’s final services PMI for November is expected to reaffirm that activity in the country’s key services sector slowed to the brink of stagnation. A weak print could exert further pressure on the pound.
Euro (EUR) wavers following uneven inflation data
The euro (EUR) traded without clear direction yesterday, initially losing traction in the face of a buoyant market mood.
Mixed inflation results then offered little clarity. While headline CPI unexpectedly ticked up in November, underlying inflation failed to rise as anticipated, leaving EUR struggling for momentum.
A solid showing in the latest services PMI could lend the single currency some support today. Markets will then look to a speech by European Central Bank (ECB) President Christine Lagarde. A hawkish message may give EUR a lift.
US dollar (USD) falters as upbeat sentiment prevails
The US dollar (USD) came under pressure yesterday, with the broadly optimistic tone across markets pulling investors away from the safe-haven currency.
Expectations that the Federal Reserve will cut interest rates next week further curbed USD appetite, although the absence of notable data limited broader volatility.
Looking ahead, a soft US jobs release for November may weigh on the dollar. Today’s ISM services PMI is unlikely to help either, with forecasters anticipating a slight slowdown in activity.
Canadian dollar (CAD) dips as oil prices slide
The Canadian dollar (CAD) also lost ground yesterday, with the commodity-linked currency dragged lower by another drop in crude prices.
Oil market movements will likely continue to guide the ‘loonie’ today. With prices staging a modest rebound, CAD could claw back some losses.
Australian dollar (AUD) holds firm despite weak growth
The Australian dollar (AUD) managed to advance overnight, brushing off an unexpected slowdown in domestic GDP as investors favoured risk-sensitive assets.
New Zealand dollar (NZD) gives back earlier gains
The New Zealand dollar (NZD) likewise benefitted from last night’s risk-on mood but has since slipped back, surrendering much of its earlier progress.
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