Pound (GBP) lacks direction ahead of BoE announcement
The pound (GBP) remained without a clear trend yesterday, extending this week’s indecisive trade amid a continued lack of UK economic data.
Sterling also saw limited movement as markets held back ahead of the Bank of England’s (BoE) interest rate decision, which is due later today.
While the BoE is widely expected to keep rates on hold, attention will turn to its guidance. Should policymakers highlight concerns over persistent inflation pressures, GBP may edge higher.
Euro (EUR) supported by inflation data
The euro (EUR) strengthened against some of its weaker peers yesterday following the release of the Eurozone’s final consumer price index for February.
Although the figures matched earlier estimates, the rise from 1.7% to 1.9% indicated that price pressures were building even before the recent surge in energy costs linked to tensions in the Middle East.
Turning to today, the European Central Bank’s (ECB) policy decision could lift EUR if officials signal caution over the inflationary impact of higher energy prices.
US dollar (USD) lifted by stronger PPI figures
The US dollar (USD) advanced yesterday after the latest US producer price index revealed a notable increase in factory gate inflation in February.
The ‘greenback’ extended its gains later in the session following the Federal Reserve’s policy announcement, as the central bank revised up its inflation outlook in response to the conflict in Iran.
With the Fed decision now behind it, USD may be driven by shifts in market sentiment today. A risk-off tone could see the currency strengthen further.
Canadian dollar (CAD) climbs alongside oil prices
The Canadian dollar (CAD) moved higher yesterday, with the oil-linked currency drawing support from rising crude prices. This helped CAD recover despite the Bank of Canada (BoC) flagging risks to growth stemming from elevated global energy costs.
Looking ahead, movements in the oil market are likely to remain the key driver for the ‘loonie’. Ongoing volatility in energy prices could result in fluctuating performance.
Australian dollar (AUD) steady despite labour market setback
The Australian dollar (AUD) traded in a narrow range overnight, with the ‘Aussie’ largely brushing off an unexpected increase in unemployment last month.
New Zealand dollar (NZD) holds firm despite softer growth
Similarly, the New Zealand dollar (NZD) remained stable during overnight trade, showing resilience even as domestic GDP came in weaker than expected in the final quarter of the year.
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