Pound (GBP) muted as markets continue to unwind BoE tightening bets
The pound (GBP) traded without clear direction against most of its peers at the end of last week, as expectations for further tightening from the Bank of England (BoE) continued to diminish.
Markets have gradually scaled back rate hike projections, with investors no longer fully pricing in a 25bps increase by year-end.
Looking ahead, movement in Sterling may be subdued at the start of this week as GBP investors await a batch of high-impact UK data releases later in the session.
Euro (EUR) steady as risk sentiment strengthens
The euro (EUR) weakened against more risk-sensitive currencies on Friday, as its safe-haven appeal became a drawback amid improving market sentiment following Iran’s decision to reopen the Strait of Hormuz.
The single currency also faced pressure from a more dovish repricing of European Central Bank (ECB) policy expectations, as easing energy prices and softer inflation risks led markets to dial back bets on a near-term rate hike.
Looking ahead, Germany’s latest producer price index could lend support to the euro today, as a stronger-than-expected rise in input costs may reinforce inflation expectations in the bloc’s largest economy.
US dollar (USD) weakens as haven demand fades
The US dollar (USD) ended last week on a weaker footing, weighed down by a notable decline in safe-haven demand during Friday’s session.
Sentiment initially improved after US President Donald Trump suggested a deal with Iran was close, before strengthening further when Iran confirmed the full reopening of the Strait of Hormuz.
However, renewed tensions between the US and Iran have already helped the US dollar recover this morning, with Tehran stating it has ‘no plans to participate’ in further talks after the US seized an Iranian cargo ship in the Strait of Hormuz.
Canadian dollar (CAD) slips as oil prices tumble
The Canadian dollar (CAD) weakened on Friday as a sharp 10% drop in oil prices reduced the appeal of the commodity-linked currency.
The ‘loonie’ may rebound today, supported by a fresh uptick in oil prices and expectations that Canada’s latest inflation data will show a notable acceleration last month.
Australian dollar (AUD) declines in risk-off trade
The Australian dollar (AUD) fell during Monday’s Asian session, as renewed US-Iran tensions dampened global risk appetite.
New Zealand dollar (NZD) weighed down by cautious sentiment
The New Zealand dollar (NZD) also came under pressure in overnight trading amid the prevailing risk-averse market mood.
Never miss a movement. Create a free account with TorFX to get the latest currency news delivered straight to your inbox. You can also set up rate alerts and check live rates 24/7.