Pound (GBP) dives on mounting BoE rate cut expectations
The pound (GBP) tumbled on Tuesday after downbeat UK labour market figures reinforced expectations that the Bank of England (BoE) will lower interest rates in March.
Data revealed that unemployment climbed to its highest level in five years across the three months to December, while earnings growth cooled to its weakest pace since August 2024.
Sterling may face further headwinds today with the publication of the UK’s latest consumer price index. With inflation moderating as forecast, investors could increase bets on a quicker pace of monetary easing from the BoE.
Euro (EUR) choppy amid conflicting influences
The euro (EUR) experienced uneven trade yesterday, slipping after Germany’s ZEW economic sentiment index unexpectedly weakened.
At the same time, losses in the single currency were limited by a cautious market mood, which lent support against more risk-sensitive currencies, alongside guarded optimism surrounding Russia-Ukraine peace negotiations in Geneva.
With no notable Eurozone data due today, the euro’s direction may hinge on geopolitical headlines and its inverse relationship with the US dollar (USD).
US dollar (USD) jumps on robust labour figures
The US dollar advanced against several counterparts earlier in the session following fresh employment data that pointed to ongoing strength in the US labour market.
However, these gains faded later on as traders locked in profits, causing USD to retreat by the close.
Attention now turns to US durable goods orders, where a projected 2% decline in December could weigh on the ‘greenback’ in today’s trading.
Canadian dollar (CAD) pressured by softer oil
The Canadian dollar (CAD) edged lower yesterday, tracking fluctuations in crude prices.
In the absence of domestic economic releases, oil price movements are likely to remain the primary driver for CAD. A rebound in crude could help the ‘loonie’ stabilise.
Australian dollar (AUD) eases as sentiment deteriorates
The Australian dollar (AUD) drifted lower during overnight trade as risk appetite weakened.
New Zealand dollar (NZD) slides after RBNZ signals dovish stance
The New Zealand dollar (NZD) dropped sharply overnight after the Reserve Bank of New Zealand (RBNZ) adopted a more dovish tone than anticipated, despite opting to keep interest rates on hold.
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