Pound (GBP) extends gains as gilt yields retreat
The pound (GBP) was among the stronger-performing major currencies towards the end of last week, climbing to levels not seen since the middle of September.
The pound’s advance was helped by another decline in UK government bond yields, as markets continued to digest the implications of Chancellor John Healey’s budget announcement on Wednesday.
With few significant UK data releases scheduled for the start of this week, and investors increasingly focused on Thursday’s Bank of England (BoE) policy decision, Sterling could struggle to sustain its recent momentum today.
Euro (EUR) retreats despite stronger-than-expected GDP growth
The euro (EUR) lost ground on Friday as its inverse relationship with the US dollar (USD), alongside renewed concerns over France’s public finances, weighed on the single currency.
This came despite the release of Eurozone GDP figures showing that economic activity proved more resilient than anticipated during the third quarter.
Looking ahead, Germany’s latest retail sales figures could add to the pressure on the euro today, with September’s data expected to highlight a significant contraction in consumer spending.
US dollar (USD) advance limited by midterm concerns
The US dollar (USD) edged higher towards the end of last week as a risk-averse market environment encouraged investors to favour safe-haven assets.
Nevertheless, the ‘greenback’ struggled to make substantial progress, with uncertainty surrounding the upcoming US midterm elections continuing to undermine sentiment.
As election day draws closer, heightened political uncertainty could inject further volatility into the US dollar over the coming sessions.
Canadian dollar (CAD) lifted by stronger oil prices
The Canadian dollar (CAD) advanced on Friday after global oil prices surged by around 2.5%, helping the ‘loonie’ overcome disappointment from weaker-than-forecast domestic GDP figures.
Further gains in crude prices could provide additional support for CAD exchange rates as the new week gets underway.
Australian dollar (AUD) cautious ahead of RBA decision
The Australian dollar (AUD) traded with little direction during Monday’s Asian session, as investors remained on the sidelines ahead of Tuesday’s Reserve Bank of Australia (RBA) interest rate announcement.
New Zealand dollar (NZD) pressured by election uncertainty
The New Zealand dollar (NZD) also struggled to attract buyers in overnight trade, with political uncertainty weighing on sentiment ahead of the country’s general election later this week.
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