Pound (GBP) lifted by upbeat market sentiment
The increasingly risk-sensitive pound (GBP) advanced against its traditional safe-haven counterparts yesterday, although it ceded ground to higher-risk currencies, as optimism swept through markets.
At the same time, Sterling’s upside was tempered by caution ahead of today’s by-election in the Greater Manchester seat of Gorton and Denton, widely viewed as an important gauge of support for Prime Minister Keir Starmer’s Labour government.
With little in the way of UK data on the calendar today and voters heading to the polls, the pound may struggle for clear direction as political developments take centre stage.
Euro (EUR) dented by soft German figures
The euro (EUR) traded unevenly on Wednesday, edging lower against firmer peers after German consumer confidence unexpectedly worsened ahead of March.
The latest GfK consumer confidence reading fell to -24.7 from -24.2, defying expectations for an improvement to -23.1 and reinforcing concerns about the resilience of Europe’s largest economy.
Attention now turns to the Eurozone’s economic sentiment index. Should the data point to a pick-up in confidence, it may offer the single currency some support.
US dollar (USD) eases in risk-friendly trade
The safe-haven US dollar (USD) retreated against more risk-sensitive currencies yesterday as buoyant market sentiment weighed on demand for the ‘greenback’.
That said, a modest recalibration of Federal Reserve rate expectations helped to limit USD’s downside, with investors trimming their bets on an imminent policy cut.
Today’s US initial jobless claims release may provide fresh impetus. If claims rise as forecast, the US dollar could face renewed headwinds.
Canadian dollar (CAD) dragged lower by softer oil
The oil-linked Canadian dollar (CAD) moved broadly lower yesterday, tracking a modest pullback in crude prices.
Commodity dynamics are likely to remain a key driver for CAD today, particularly as markets monitor ongoing US-Iran nuclear discussions in Geneva for any signals that could influence global supply.
Australian dollar (AUD) supported by positive risk appetite
The Australian dollar (AUD) hovered close to recent highs overnight, underpinned by the risk-on tone across markets, which continued to favour risk-oriented currencies such as the ‘Aussie’.
New Zealand dollar (NZD) trims gains despite downbeat data
The New Zealand dollar (NZD) initially climbed during overnight trade, buoyed by the broader risk-on backdrop, despite a surprise fall in domestic business confidence in February. However, those gains proved short-lived, with the currency slipping back this morning.
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