Pound (GBP) lifted by hawkish BoE undertones
The pound (GBP) advanced yesterday following the Bank of England’s (BoE) final policy decision of the year.
Although the BoE delivered an expected rate cut and downgraded its inflation outlook, its statement hinted that further easing decisions will become ‘a closer call’, suggesting a slower pace of rate reductions ahead.
However, a portion of Sterling’s gains could be unwound today after the UK’s latest retail sales figures revealed an unexpected contraction in sales growth last month.
Euro (EUR) eases as ECB cautions on currency strength
The euro (EUR) edged lower on Thursday as the European Central Bank (ECB) announced its final interest rate decision of 2025.
Despite the ECB holding rates steady and upgrading its growth projections, comments from President Christine Lagarde that a ‘stronger euro could dampen inflation’ weighed on the single currency.
The euro may face further pressure today as Germany’s latest consumer confidence index showed sentiment heading into January sank to its weakest level since April 2024.
US dollar (USD) retreats after weaker CPI reading
The US dollar (USD) came under pressure during yesterday’s trade after fresh CPI data showed inflation slowing from 3% to 2.7%.
The sharper-than-expected fall in price growth reinforced the prevailing bearish USD bias, fuelling expectations of additional monetary easing from the Federal Reserve in 2026.
Rounding off the week is the University of Michigan’s consumer sentiment survey, with a confirmed improvement in December morale potentially lending some support to the US dollar.
Canadian dollar (CAD) steady as oil prices stall
The Canadian dollar (CAD) traded within a tight range on Thursday as oil prices lost momentum.
Looking ahead, the ‘loonie’ could find support later today if Canada’s latest retail sales report shows a rebound in sales growth in November.
Australian dollar (AUD) subdued amid cautious mood
The Australian dollar (AUD) remained on the back foot overnight on Thursday, as a risk-averse market environment curbed demand for the risk-sensitive ‘Aussie’.
New Zealand dollar (NZD) weakens as risk appetite wanes
The New Zealand dollar (NZD) drifted lower in overnight trade, with the ‘kiwi’ pressured by a softening in global risk sentiment.
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