Pound (GBP) struggles despite retail sales rebound
The pound (GBP) remained subdued at the end of last week, with GBP investors largely overlooking the UK’s latest retail sales figures.
Although consumer spending staged an unexpected recovery in August, Sterling continued to face pressure following Thursday’s interest rate decision from the Bank of England (BoE).
Looking ahead, the pound could lack direction at the beginning of this week as the UK economic calendar contains little in the way of notable data.
Euro (EUR) unmoved by ECB Lagarde remarks
The euro (EUR) was subdued on Friday, following remarks from European Central Bank (ECB) President Christine Lagarde.
Lagarde indicated that the bank had yet to observe any second-round inflation effects, while reiterating that policymakers will continue to determine interest rates on a meeting-by-meeting basis.
The euro begins this week under pressure after ‘disastrous’ results for Germany’s CDU government in two local elections over the weekend raised fresh questions over Chancellor Friedrich Merz’s future.
US dollar (USD) supported by yen slump
The US dollar (USD) outperformed most of its peers on Friday, with the currency benefiting heavily from the sharp decline in the Japanese yen (JPY).
The ‘greenback’ was further supported by a cautious market mood after US President Donald Trump suggested that the US could potentially resume strikes against Iran.
Looking to the start of this week, the US dollar could continue to attract demand if geopolitical uncertainty continues to undermine risk appetite.
Canadian dollar (CAD) slips as crude prices ease
The Canadian dollar (CAD) edged lower on Friday as falling oil prices curbed demand for the commodity-linked currency.
The ‘loonie’ is likely to remain sensitive to oil price movements through Monday’s session, with further weakness possible if crude prices continue to retreat.
Australian dollar (AUD) supported by RBA rate bets
The Australian dollar (AUD) moved broadly higher through Monday’s Asian session, as expectations of another Reserve Bank of Australia (RBA) rate hike helped shield the ‘Aussie’ from renewed market risk aversion.
New Zealand dollar (NZD) weakened by risk aversion
The New Zealand dollar (NZD) came under pressure in overnight trade as geopolitical uncertainty reduced demand for the risk-sensitive ‘kiwi’.
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