Pound (GBP) weakened by BoE policy announcement
The pound (GBP) came under pressure against the majority of its peers on Thursday following the Bank of England’s (BoE) latest policy meeting.
Alongside leaving interest rates unchanged, the BoE lowered its inflation projections, leading investors to further scale back expectations for a rate hike later this year.
The outcome of the Makerfield by-election is set to dominate Sterling sentiment into the end of the week, with Andy Burnham’s decisive win likely to intensify speculation over Prime Minister Keir Starmer’s future.
Euro (EUR) pressured by stronger US dollar
The euro (EUR) edged lower yesterday, weighed down by its negative correlation with the US dollar (USD).
However, the downside was limited by the signing of a US-Iran peace accord and a continued decline in energy costs, developments that should benefit Europe given its reliance on imported fuel.
Germany’s latest producer price index may place further pressure on the euro today after factory gate inflation rose by less than economists had anticipated last month.
US dollar (USD) supported by rising Fed rate expectations
The US dollar advanced on Thursday as investors continued to favour the currency following the Federal Reserve’s latest interest rate decision.
Markets kept adjusting their expectations for Fed policy after new Chair Kevin Warsh adopted a distinctly hawkish tone, with traders now assigning roughly a 70% chance of a rate hike before the end of summer.
With no major US data releases scheduled, the US dollar could struggle for direction today as optimism surrounding the US-Iran peace agreement continues to support risk appetite.
Canadian dollar (CAD) hampered by lower oil prices
The Canadian dollar (CAD) found it difficult to gain momentum yesterday as declining oil prices reduced support for the commodity-linked currency.
Looking ahead, the ‘loonie’ could encounter additional pressure if Canada’s latest retail sales report signals softer consumer demand through May.
Australian dollar (AUD) slips amid mixed market conditions
The Australian dollar (AUD) moved lower during Thursday’s Asian session as an uneven market backdrop reduced demand for risk-sensitive assets.
New Zealand dollar (NZD) retreats as risk appetite fades
The New Zealand dollar (NZD) also traded lower overnight as a more cautious market mood weighed on investor sentiment.
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