Pound (GBP) climbs against safer peers
The increasingly risk-sensitive pound (GBP) advanced against safe-haven currencies yesterday, but struggled to keep pace with riskier counterparts as market sentiment improved rapidly.
Sterling also found support from a notable decline in UK government bond yields, which helped ease concerns surrounding the UK’s fiscal outlook.
With no UK economic releases scheduled again today, GBP may continue to move within a broad range, driven largely by external factors.
Euro (EUR) pressured by shifting ECB expectations
The euro (EUR) weakened against stronger currencies yesterday after the US-Iran ceasefire triggered a sharp fall in energy prices. This led investors to scale back expectations of a European Central Bank (ECB) interest rate increase later this month.
At the same time, softer-than-expected German factory orders and a contraction in Eurozone retail sales added further pressure to the single currency.
Looking ahead, mixed German data could limit EUR’s direction this morning. While exports rebounded solidly in February, industrial production unexpectedly declined.
US dollar (USD) slides amid risk-on mood
The US dollar (USD) dropped sharply yesterday as investors moved away from safe-haven assets following news of the US-Iran ceasefire.
Optimism that tensions could ease further lifted market sentiment and reignited expectations that the Federal Reserve may cut interest rates later this year.
Today brings the final US GDP estimate for the fourth quarter of 2025, alongside February’s inflation figures. However, USD movement may remain tied to developments in the Middle East, with any signs of instability in the ceasefire potentially lending the ‘greenback’ some support.
Canadian dollar (CAD) falls alongside oil
The oil-sensitive Canadian dollar (CAD) declined significantly yesterday as crude prices dropped in response to the ceasefire news.
Oil price trends are likely to remain the primary driver for CAD today. Should geopolitical uncertainty prompt a rebound in crude, the Canadian dollar may recover some of its recent losses.
Australian dollar (AUD) edges lower on uncertainty
The Australian dollar (AUD) weakened slightly overnight as early signs of strain in the US-Iran ceasefire dampened market sentiment.
New Zealand dollar (NZD) supported by growth outlook
The New Zealand dollar (NZD) edged higher overnight after Reserve Bank of New Zealand (RBNZ) Governor Anna Breman reiterated expectations that the New Zealand economy will expand in 2026.
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