Pound (GBP) advances in spite of UK growth downgrade
The pound (GBP) moved higher overall during yesterday’s trading, even as forecasts for UK economic growth in 2026 were sharply revised lower.
According to the International Monetary Fund’s (IMF) latest projections, the UK is set to be the hardest-hit G7 economy by the conflict in Iran, with growth now seen at 0.8%, down from an earlier estimate of 1.3%.
Bank of England (BoE) Governor Andrew Bailey is due to speak later today, although his remarks may not provide a clear catalyst, potentially leaving GBP exchange rates rangebound.
Euro (EUR) pressured by Lagarde’s cautious tone
The euro (EUR) weakened on Tuesday, weighed down by a broader risk-on environment and comments from European Central Bank (ECB) President Christine Lagarde.
In an interview with Bloomberg, Lagarde emphasised the importance of a data-led approach to monetary policy, which tempered expectations for a near-term interest rate increase.
Attention now turns to the Eurozone’s latest industrial production figures. If they indicate a return to growth in February, the single currency could find some limited support.
US dollar (USD) slides amid renewed peace optimism
The US dollar (USD) came under sustained pressure yesterday, slipping to its lowest levels since the outbreak of the US-Iran conflict.
Demand for the safe-haven currency weakened further after US President Donald Trump suggested that peace negotiations with Iran could resume ‘within the next two days’.
Developments in the Middle East are likely to remain the primary driver for USD today, with any further signs of de-escalation expected to reinforce the downward trend.
Canadian dollar (CAD) weighed down by oil price drop
The crude-linked Canadian dollar (CAD) edged lower against most counterparts on Tuesday, undermined by a notable decline in oil prices.
Looking ahead, movements in the ‘loonie’ are expected to remain closely tied to fluctuations in the oil market throughout today’s session.
Australian dollar (AUD) lifted by hawkish RBA signals
The Australian dollar (AUD) pushed higher overnight, supported by improving risk appetite and hawkish remarks from Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser.
New Zealand dollar (NZD) muted despite upbeat market mood
The New Zealand dollar (NZD) traded sideways overnight, with the ‘kiwi’ failing to gain traction despite a generally positive market mood.
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