Pound (GBP) holds steady despite upbeat GDP figures
The pound (GBP) made little headway against most major currencies yesterday, as investors largely looked past the UK’s latest GDP figures, even though they revealed the strongest pace of economic growth in more than two years.
The data failed to shift market expectations, with investors seemingly unconvinced that the stronger reading would prompt the Bank of England (BoE) to take a more hawkish stance on its current tightening path.
With few significant UK economic releases scheduled today, the pound may struggle to find a clear direction.
Euro (EUR) subdued as ECB and Fed policy outlooks diverge
The euro (EUR) traded without much momentum on Thursday, as growing differences between the monetary policy outlooks of the European Central Bank (ECB) and US Federal Reserve weighed on the single currency.
While the Fed is expected to pursue a more aggressive approach to interest rate increases, euro investors anticipate that the ECB will stick to its comparatively cautious policy stance.
Looking ahead, the Eurozone’s second estimate of third-quarter GDP could dampen demand for EUR today if, as expected, it confirms a slowdown in regional growth and underscores the economic difficulties facing the bloc’s two largest economies, France and Germany.
US dollar (USD) supported by expectations of further Fed tightening
The US dollar (USD) climbed to a new year-to-date high on Thursday, as confidence in the prospect of further Federal Reserve interest rate increases continued to underpin the currency.
However, the ‘greenback’ surrendered some of its momentum later in the session after US initial jobless claims rose by more than anticipated last week.
The latest US producer price index is due to close out this week’s economic calendar. A slowdown in factory input costs could prompt investors to scale back expectations of a 50-basis-point Fed rate hike next month, potentially weighing on the dollar.
Canadian dollar (CAD) edges higher as oil prices recover
The Canadian dollar (CAD) posted modest gains on Thursday, with the currency drawing support from a slight recovery in oil prices after US President Donald Trump suggested Washington had no need to reach an agreement with Iran.
Should crude prices continue to climb, the ‘loonie’ may find further support heading into the weekend.
Australian dollar (AUD) retreats amid cautious market sentiment
The Australian dollar (AUD) remained under pressure during overnight trade on Thursday, as a broadly risk-averse mood across financial markets dampened demand for the currency.
New Zealand dollar (NZD) slips as factory growth disappoints
The New Zealand dollar (NZD) also lost ground overnight, following the release of the country’s latest manufacturing PMI, which came in below market forecasts.
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