Pound (GBP) buoyed as investors trim BoE rate cut bets
The pound (GBP) traded with modest support on Friday as markets continued to scale back bets for Bank of England (BoE) monetary easing this year.
As inflationary risks mount, the odds of a rate cut continue to plummet, with the market no longer pricing in two 25bps interest rate cuts before the end of 2026.
In the absence of any notable UK economic releases, the pound is likely to be influenced by wider market trends through Monday’s trading session.
Euro (EUR) slides as GDP revised lower
The euro (EUR) closed last week’s session on the defensive after the Eurozone's latest GDP estimate for the end of 2025 was revised down from 0.3% to 0.2%.
The EUR selling bias was then reinforced by fears that higher energy prices will curtail Eurozone growth at the start of 2026.
Today’s session opened with the publication of Germany’s latest factory orders and industrial production figures, with the euro under pressure after reporting a weak start to the year for the country’s vital manufacturing sector.
US dollar (USD) retreats amid payroll shock
The US dollar (USD) initially pressed higher on Friday as the conflict in the Middle East and the resulting rise in energy prices continued to underpin demand for the safe-haven currency.
However, the ‘greenback’ ultimately closed the session on a sour note after the latest US non-farm payrolls reported the US economy unexpectedly shed 92,000 jobs last month.
As the situation in the Middle East escalates, and oil prices pass $100 a barrel, demand for the US dollar is set to rise again today.
Canadian dollar (CAD) firms as oil price rally continues
The Canadian dollar (CAD) remained well supported at the end of last week as the continued rise in oil prices and stronger-than-expected domestic PMI data underpinned demand for the commodity-linked currency.
Expect the ‘loonie’ to maintain its positive momentum at the start of this week as oil prices continue to surge.
Australian dollar (AUD) slides in risk-off trade
The Australian dollar (AUD) slumped through Monday’s Asian trading session as the war in the Middle East continues to rattle markets.
New Zealand dollar (NZD) pressured by cautious mood
The New Zealand dollar (NZD) also faced headwinds overnight as surging oil prices and geopolitical uncertainty weighed on risk appetite.
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