Pound (GBP) rebounds after government reaffirms fiscal discipline
The pound (GBP) got off to a slow start on Friday before gaining momentum and climbing through the remainder of the session.
Sterling appeared to benefit from remarks by Chancellor John Healey, who reaffirmed the government’s commitment to its fiscal rules while confirming the date of the Autumn Budget.
Attention today turns to the UK’s final manufacturing PMI. The PMI was revised down to show that factory activity slowed in July, which may weigh on GBP.
Euro (EUR) recovers after inflation tops expectations
The euro (EUR) came under pressure early on Friday as an improving market mood reduced demand for the safer single currency.
However, EUR recovered later in the session after the Eurozone’s latest consumer price index for July printed above market expectations.
Looking ahead, Germany’s latest retail sales figures may undermine the euro after reporting a steeper-than-expected 1.1% contraction in June.
US dollar (USD) slips amid brighter market sentiment
The US dollar (USD) weakened into the close of last week as investors continued to pare back expectations for further Federal Reserve interest rate hikes.
At the same time, a cautiously optimistic market mood reduced demand for the safe-haven ‘greenback’.
Today, the latest ISM manufacturing PMI may set the tone for USD. Should the survey indicate stronger factory activity in July, the US dollar could regain ground.
Canadian dollar (CAD) retreats despite stronger-than-expected GDP
The oil-sensitive Canadian dollar (CAD) edged higher at the start of Friday’s session as crude prices advanced, but later surrendered those gains despite Canada reporting better-than-forecast GDP growth.
With no notable Canadian economic releases scheduled today, movement in oil prices is likely to be the primary driver of the ‘loonie’. If crude prices decline as tensions in the Middle East continue to ease, CAD exchange rates may come under pressure.
Australian dollar (AUD) subdued despite stronger inflation reading
The Australian dollar (AUD) traded in a narrow range at the start of this week, despite the latest monthly inflation indicator revealing a larger-than-expected increase in price pressures during July.
New Zealand dollar (NZD) gives up early gains as sentiment fluctuates
The New Zealand dollar (NZD) began the week on a firm footing before surrendering its advance as uncertainty in the wider market mood returned.
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