Pound (GBP) advances amid BoE rate hike expectations
The pound (GBP) was initially unsettled yesterday as the absence of UK economic releases left Sterling exposed to shifts in market sentiment.
However, GBP gathered momentum later in the session, buoyed by continued confidence surrounding the UK government leadership transition and growing expectations of further Bank of England (BoE) interest rate hikes.
Today, nominations officially open for the Labour leadership contest. Should frontrunner Andy Burnham appear likely to face no challenger, Sterling could find additional support.
Euro (EUR) lacks direction amid data lull
The euro (EUR) traded without a clear trend yesterday as the absence of fresh Eurozone economic data left the single currency searching for direction.
As a result, EUR exchange rates fluctuated within a broad range, with wider market volatility driving uneven price action.
The European Central Bank’s (ECB) latest policy meeting minutes are scheduled for release this afternoon. Any indication that policymakers remain receptive to additional rate hikes may lend support to the euro.
US dollar (USD) fluctuates despite cautious market mood
The US dollar (USD) experienced uneven trading yesterday, with rising tensions between the US and Iran failing to generate lasting demand for the safe-haven currency.
Meanwhile, the Federal Reserve’s latest meeting minutes offered little fresh impetus for USD after the central bank maintained a balanced, wait-and-see stance.
Looking ahead, a forecast increase in US jobless claims could weigh on the US dollar later today. At the same time, persistent tensions in the Middle East may help support the ‘greenback’ if investor sentiment remains subdued.
Canadian dollar (CAD) strengthened by further oil gains
The commodity-sensitive Canadian dollar (CAD) ranked among yesterday’s strongest performers after crude oil prices surged by around 7%, providing a significant boost to the currency.
Oil market movements are expected to remain the primary driver for CAD today, with the ‘loonie’ likely to appreciate further if crude prices continue climbing as tensions in the Middle East intensify.
Australian dollar (AUD) trades sideways despite escalating Middle East tensions
The Australian dollar (AUD) moved within a narrow range overnight as mixed market sentiment persisted, with risk appetite proving more resilient than expected despite fresh US strikes against Iranian targets.
New Zealand dollar (NZD) rallies after PMI beats expectations
The New Zealand dollar (NZD) built on its recent gains yesterday after the latest manufacturing PMI comfortably exceeded forecasts, climbing to 59.7 in June, its strongest reading since July 2021.
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