Pound (GBP) mixed as markets assess PMIs
The pound (GBP) traded unevenly yesterday as investors reacted to the UK’s preliminary PMIs for March.
The data signalled a marked slowdown in the services sector, with softer demand and a pick-up in job losses. At the same time, the surveys pointed to strengthening price pressures, reinforcing expectations that the Bank of England (BoE) may adopt a more hawkish stance.
Looking at today’s data, February’s consumer price index showed headline inflation unchanged. However, a modest and unexpected rise in core inflation is providing some support to Sterling this morning.
Euro (EUR) directionless in wake of PMI data
The euro (EUR) lacked clear momentum yesterday, as the latest Eurozone PMIs shed light on the early economic effects of the Middle East crisis.
Rising energy costs linked to the conflict are weighing on growth across the bloc, while also fuelling inflationary pressures. This combination could push the European Central Bank (ECB) towards considering further interest rate increases.
Coming up, Germany’s latest business climate index may weigh on the single currency if it signals a sharp deterioration in confidence following the escalation in the Middle East.
US dollar (USD) rebounds as relief rally fades
The safe-haven US dollar (USD) edged higher yesterday after Iran disputed US President Donald Trump’s assertion that constructive talks had taken place between the two sides.
Contradictory messaging from Washington and Tehran, alongside continued hostilities in the region, dampened the optimism that had driven Monday’s relief rally.
With little in the way of US data today, the ‘greenback’ is likely to be driven by shifts in market sentiment. Any developments tied to the Middle East situation could trigger further volatility.
Canadian dollar (CAD) rangebound alongside oil prices
The oil-sensitive Canadian dollar (CAD) moved within a narrow range yesterday, tracking fluctuating crude prices.
Oil is expected to remain the key influence on CAD today, with the currency vulnerable to swings if energy markets continue to show instability.
Australian dollar (AUD) uncertain as inflation eases
The Australian dollar (AUD) drifted overnight, pressured by changing market sentiment and a weaker-than-forecast inflation reading in Australia.
New Zealand dollar (NZD) fluctuates with market mood
The New Zealand dollar (NZD) experienced mixed movement yesterday as uncertainty surrounding a proposed US-led peace effort in Iran caused risk appetite to shift.
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