Pound (GBP) pressured by persistent political uncertainty
The pound (GBP) came under pressure yesterday as concerns surrounding the Peter Mandelson controversy and Prime Minister Keir Starmer’s position as Labour leader continued to weigh on sentiment.
With Parliament votnig on whether Starmer should face an inquiry over claims he misled MPs, political unease drove UK borrowing costs close to levels last seen during the 2008 financial crisis.
With little UK data due today and the Bank of England (BoE) interest rate decision approaching, Sterling may remain confined to a relatively tight range.
Euro (EUR) mixed amid inflation worries and stronger USD
The euro (EUR) traded with mixed momentum yesterday, advancing against weaker counterparts while slipping elsewhere.
This uneven performance followed a notable rise in Eurozone consumer inflation expectations, which lent some support to the single currency. However, strength in the US dollar (USD) limited gains, reflecting the euro’s negative correlation with the ‘greenback’.
Looking ahead, a projected decline in Eurozone economic sentiment for April could act as a drag on EUR, although an uptick in German inflation may help cushion any losses.
US dollar (USD) supported by renewed Middle East tensions
The US dollar strengthened yesterday as a shift towards risk aversion boosted demand for safe-haven assets, amid reports that President Donald Trump is unhappy with Iran’s latest peace proposal.
Despite this, the ‘greenback’ struggled to hold on to its gains and pulled back later in the session.
Attention now turns to the Federal Reserve’s policy announcement this evening, which may keep USD trading cautiously today.
Canadian dollar (CAD) dips on profit-taking
The oil-linked Canadian dollar (CAD) initially climbed yesterday morning, supported by rising crude prices and briefly reaching multi-week highs against some peers, before retreating as investors took profits.
Focus today will be on the Bank of Canada’s (BoC) interest rate decision. While policymakers are expected to leave rates unchanged, any signals pointing to future tightening could provide support for the ‘loonie’.
Australian dollar (AUD) weakens after soft inflation data
The Australian dollar (AUD) moved lower overnight as Australia’s latest inflation figures came in below expectations, dampening support for the currency.
New Zealand dollar (NZD) softens following RBNZ commentary
The New Zealand dollar (NZD) also edged lower during the Asian session, after Reserve Bank of New Zealand (RBNZ) Governor Anna Breman suggested that core inflation remains stable, reducing expectations for further rate increases.
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