Pound (GBP) strengthens as BoE rate bets firm
The pound (GBP) gained ground against several of its peers at the end of last week as expectations for a Bank of England (BoE) interest rate hike continued to build.
Markets increased their bets that the BoE could raise interest rates before year-end on Friday, reflecting concerns that elevated inflationary pressures may prove more persistent than previously anticipated.
Sterling may struggle to establish a clear direction today, with GBP investors likely to remain cautious ahead of a series of significant UK economic releases due later this week.
Euro (EUR) steady as GDP meets expectations
The euro (EUR) was broadly unchanged on Friday after the Eurozone’s latest GDP figures matched market forecasts.
The second estimate confirmed that economic growth accelerated by 0.4% between April and June, following stagnation across the bloc during the first quarter.
With Eurozone data remaining relatively sparse at the beginning of this week, the euro could continue to lack a clear directional catalyst today.
US dollar (USD) slides as Treasury yields surge
The US dollar (USD) ended last week under pressure as a sharp rise in yields on longer-dated US Treasury bonds weighed on sentiment.
Adding to the ‘greenback’s’ losses was the latest US retail sales report, which unexpectedly revealed a contraction in consumer spending last month.
Selling pressure on the US dollar appears to be intensifying this morning as markets further scale back expectations for a Federal Reserve rate hike.
Canadian dollar (CAD) buoyed by firmer oil prices
The Canadian dollar (CAD) advanced broadly on Friday as higher oil prices continued to support the commodity-sensitive currency.
These gains could come under pressure at the start of this week, however, if Canada’s latest consumer price index points to another slowdown in inflation.
Australian dollar (AUD) surges amid positive risk flows
The Australian dollar (AUD) began this week on a strong footing, climbing through Monday’s Asian session as a broadly risk-positive mood boosted demand.
New Zealand dollar (NZD) advances as risk appetite improves
The New Zealand dollar (NZD) also moved higher overnight as improving market sentiment encouraged demand for risk-sensitive currencies.
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