Pound (GBP) treads water despite stronger UK GDP
The pound (GBP) struggled to gain meaningful traction towards the end of last week, despite the UK economy expanding more strongly than expected.
Although the surprise growth recorded in July was welcomed by markets, it was not considered significant enough to alter expectations for Bank of England (BoE) policy and therefore failed to provide much of a lift for Sterling.
The pound could face a subdued start to the week as GBP markets look ahead to several high-impact UK economic releases, alongside the BoE’s upcoming interest rate decision.
Euro (EUR) subdued as safe-haven demand wanes
A quiet calendar for Eurozone economic data left the euro (EUR) lacking a clear direction on Friday.
While speculation that the European Central Bank (ECB) could take a more hawkish approach provided some support, this was insufficient to offset changing risk dynamics across markets.
With little in the way of Eurozone data due at the beginning of this week, broader market developments may continue to dictate the direction of the euro.
US dollar (USD) subdued despite sticky inflation
The US dollar (USD) remained subdued on Friday as demand for the safe-haven currency weakened amid a calmer market environment.
This came despite expectations of an interest rate hike from the Federal Reserve this week becoming firmer following stronger-than-expected US inflation data.
At the start of this week, however, the US dollar is finding renewed support as risk sentiment deteriorates. Should the cautious mood persist, USD could continue to climb.
Canadian dollar (CAD) slips as oil prices retreat
The Canadian dollar (CAD) weakened into the end of last week as falling oil prices reduced the appeal of the commodity-linked currency, with crude prices retreating by almost 3%.
Oil prices are moving higher again this week, which could provide some support for the ‘loonie’. Canada’s latest inflation figures, due this afternoon, could also have an impact on CAD exchange rates, particularly if the data deviates from expectations.
Australian dollar (AUD) retreats amid risk aversion
The Australian dollar (AUD) slipped overnight as a more risk-averse market environment weighed on demand for the ‘Aussie’.
New Zealand dollar (NZD) slips as market caution persists
Similarly, the New Zealand dollar (NZD) got off to a weaker start this week as a nervous tone across markets dampened demand.
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