Pound (GBP) supported by easing gilt yields
The pound (GBP) made modest gains on Thursday as the cost of UK government borrowing continued to ease.
Yields on 10-year UK government bonds dropped to their lowest point in more than a month, as investors continued assessing the implications of Chancellor John Healey’s first Autumn Budget, unveiled on Wednesday.
With little significant UK economic data due today, further movement in the bond market is likely to remain a key influence on the pound.
Euro (EUR) subdued after ECB holds interest rates
The euro (EUR) struggled to find direction on Thursday after the European Central Bank (ECB) decided to leave borrowing costs unchanged at its latest policy meeting.
Although the decision had been widely anticipated, sentiment towards the single currency appeared to suffer after President Christine Lagarde announced she would leave her post in February.
Looking ahead, the euro could face renewed pressure towards the end of the week, with the Eurozone’s latest GDP figures expected to reveal a marked slowdown in economic growth during the third quarter.
US dollar (USD) supported by robust economic growth
The US dollar (USD) strengthened throughout Thursday’s session, drawing support from stronger-than-expected economic growth figures.
Preliminary estimates showed the US economy expanded by 3.4% in the third quarter, providing further evidence of its resilience and reinforcing market expectations that the Federal Reserve could raise interest rates in December.
With the US economic calendar relatively quiet today, broader market sentiment may dictate the ‘greenback’s’ direction, with heightened risk aversion likely to sustain demand for the safe-haven currency.
Canadian dollar (CAD) retains support from BoC hike
The Canadian dollar (CAD) continued to edge higher on Thursday, with the currency still benefiting from the Bank of Canada’s (BoC) decision to raise interest rates earlier this week.
However, the ‘loonie’ could lose ground today if Canada’s latest monthly GDP figures confirm that economic activity remained subdued in September.
Australian dollar (AUD) volatile as risk appetite shifts
The Australian dollar (AUD) experienced a choppy overnight session, initially moving higher before surrendering its gains as sentiment across financial markets deteriorated.
New Zealand dollar (NZD) struggles to extend recovery
The New Zealand dollar (NZD) also edged higher during Friday’s Asian session, but the ‘kiwi’ struggled to hold onto its gains as fading risk appetite weighed on demand ahead of the European session.
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