Pound (GBP) stumbles following UK inflation figures
The pound (GBP) fell yesterday as markets reacted to a cooler-than-forecast UK consumer price index.
Headline inflation held at 2.8% in May, rather than rising to 3%, and core inflation edged up less than anticipated. This dampened bets on a Bank of England (BoE) interest rate hike this year, which weighed on GBP.
Sterling could face significant turbulence today, with the BoE decision and Makerfield by-election potentially infusing GBP with volatility. Overall, we could see the pound weaken.
Euro (EUR) subdued by USD correlation
The euro (EUR) faced modest pressure yesterday, with the single currency suffering from its negative correlation with the US dollar (USD), as the latter strengthened.
Meanwhile, a lack of Eurozone economic data left EUR lacking support.
With Eurozone data thin on the ground today, the single currency may struggle to find a clear direction.
US dollar (USD) soars as Fed signals rate hikes
The US dollar firmed yesterday as US retail sales accelerated from 0.4% in April to 0.9% in May, beating forecasts for 0.5% growth.
The ‘greenback’ then leapt higher in the evening following the Federal Reserve decision, as the bank held interest rates steady but updated its projections to signal potential rate hikes in the future.
USD investors may refocus their attention on Middle East developments today. We could see the ‘greenback’ trim yesterday’s gains after the US and Iran signed an interim peace deal to end the war.
Canadian dollar (CAD) remains pressured despite uptick in oil
The crude-linked Canadian dollar (CAD) was muted yesterday, with a modest recovery in oil prices failing to lift CAD, although it did help the currency avoid further losses against some of its peers.
Canada’s latest producer price inflation figures are due out today. Elevated factory gate inflation in May could support the ‘loonie’, if it boosts bets that the Bank of Canada (BoC) may need to consider an interest rate hike later in the year.
Australian dollar (AUD) firms amid improving mood
The Australian dollar (AUD) ticked higher overnight amid an improving market mood, following the signing of the interim peace deal to end the US-Iran war.
New Zealand dollar (NZD) buoyed by GDP figures
The New Zealand dollar (NZD) initially rose overnight, following upbeat GDP figures from New Zealand. However, the ‘kiwi’ struggled to hold on to its gains.
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