Pound (GBP) tumbles after dovish BoE decision
The pound (GBP) came under notable selling pressure on Thursday, following the Bank of England’s (BoE) first policy meeting of the year.
Although the BoE kept interest rates unchanged at 3.75% as widely anticipated, the unexpectedly tight 5–4 vote split led GBP investors to factor in a faster pace of monetary easing from the BoE in 2026.
Looking ahead, Sterling could remain on the back foot through the rest of the week as Prime Minister Keir Starmer continues to face scrutiny over the Mandelson–Epstein controversy.
Euro (EUR) stable after ECB holds rates
The euro (EUR) was largely rangebound on Thursday as investors absorbed the European Central Bank’s (ECB) latest interest rate announcement.
Like its UK counterpart, the ECB opted to leave rates unchanged, reiterating its confidence that inflation will settle at the 2% target despite recent euro appreciation.
However, the single currency may face headwinds today after Germany’s latest industrial production data revealed a steeper-than-forecast fall in factory output in December.
US dollar (USD) upside capped by soft labour figures
The US dollar (USD) began yesterday’s session on a firm footing, drawing support from safe-haven flows amid wider market turbulence.
Those gains were largely pared back later in the day after US employment data came in weaker than expected.
Wrapping up the week is the release of the University of Michigan’s latest consumer sentiment survey, with any further dip in confidence potentially weighing on the US dollar.
Canadian dollar (CAD) weighed down by softer oil
The Canadian dollar (CAD) edged lower on Thursday as a pullback in oil prices reduced demand for the commodity-linked currency.
Canada’s latest employment report is due later today, with CAD sentiment likely to deteriorate if joblessness remained elevated last month.
Australian dollar (AUD) supported by RBA hike expectations
The Australian dollar (AUD) pushed higher in overnight trade on Thursday as investors ramped up expectations of another Reserve Bank of Australia (RBA) rate increase in May.
New Zealand dollar (NZD) strengthens as sentiment improves
The New Zealand dollar (NZD) also advanced overnight, benefiting from a rebound in market risk appetite.
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