Pound (GBP) steadies after early wobble
The pound (GBP) spent the morning on the back foot yesterday as renewed speculation that Prime Minister Keir Starmer could face a leadership challenge in early 2026 unsettled markets.
Sterling later clawed back ground against softer counterparts, with a lift in UK gilt yields helping to restore some demand for the British currency.
Bank of England (BoE) Governor Andrew Bailey is scheduled to speak today. A notably dovish message could sap GBP momentum.
Euro (EUR) pressured by inverse moves in USD
The euro (EUR) gained some initial traction yesterday after German industrial output unexpectedly jumped in October.
That support faded as the session wore on, however, with EUR retreating against firmer rivals due to its negative correlation with a strengthening US dollar (USD).
Germany’s latest trade data could influence euro trade today, with evidence of sluggish activity potentially dragging on the single currency.
US dollar (USD) firms as markets adjust rate expectations
The US dollar advanced yesterday as investors dialled back some of their more dovish assumptions about the Federal Reserve’s near-term stance.
Rising US Treasury yields moved in step with USD gains, reflecting cautious repositioning in the run-up to the Fed’s interest rate announcement tomorrow.
A last-minute flurry of US labour market data is due today. Softer-than-expected readings may reverse some of USD’s recent strength.
Canadian dollar (CAD) benefits from stronger USD backdrop
The Canadian dollar (CAD) delivered a mixed performance yesterday, but managed to strengthen against weaker peers despite sliding oil prices. Its upside stemmed from CAD’s positive alignment with the US dollar.
Fluctuations in crude prices may guide CAD today, though trading could remain contained ahead of tomorrow’s Bank of Canada (BoC) rate decision.
Australian dollar (AUD) rallies amid hawkish RBA stance
The Australian dollar (AUD) pushed higher overnight after the Reserve Bank of Australia (RBA) kept interest rates on hold while reiterating that another hike remains possible, even after last week’s softer GDP print.
New Zealand dollar (NZD) lifts alongside resilient AUD
The New Zealand dollar (NZD) also strengthened during last night’s session, supported by its close positive correlation with the buoyant Australian dollar.
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