Pound (GBP) bolstered by GDP surprise
The pound (GBP) strengthened yesterday after the UK’s latest GDP figures surprised to the upside.
The unexpected expansion of growth in August was seen as further strengthening the case for the Bank of England (BoE) to raise interest rates at its next meeting, while also providing a little more fiscal buffer for Chancellor John Healey in his upcoming budget.
Turning to today’s session, comments by BoE Governor Andrew Bailey could dampen Sterling sentiment after he suggested that evidence of second-round inflation has so far been ‘quite subdued’.
Euro (EUR) underpinned by USD weakness
The euro (EUR) enjoyed a much-needed reprieve on Thursday, as the single currency’s inverse trade relationship with the US dollar (USD) helped to arrest the recent EUR selloff.
However, the euro was only able to erase a small portion of its recent losses as France’s ongoing debt crisis continued to cast a long shadow over the currency.
The Eurozone will publish its finalised inflation figures for September today, but while these are expected to confirm price pressures have accelerated to a three-year high, they are unlikely to have a material impact on European Central Bank (ECB) rate expectations.
US dollar (USD) slides amid AI risk
The US dollar (USD) was pressured through yesterday’s session as a selloff across the AI sector spooked USD investors.
This saw the ‘greenback’ retreat from Wednesday’s year-to-date highs, despite US producer prices and consumer spending outpacing expectations last month.
The US dollar remains on the back foot this morning, following comments made by Federal Reserve Chair Kevin Warsh overnight, in which he said he would not be drawn into whether or not the bank would raise rates this month.
Canadian dollar (CAD) dented by cooling oil prices
The Canadian dollar (CAD) was subdued on Thursday as a pullback in global oil prices dampened demand for the commodity-linked currency.
With oil prices continuing to cool, the ‘loonie’ may remain on the defensive through the remainder of the week.
Australian dollar (AUD) gains capped by dovish RBA pricing
The Australian dollar (AUD) rebounded amid a notable risk rally during Friday’s Asian session, but found its gains capped as markets trimmed the odds of the Reserve Bank of Australia (RBA) hiking rates in November to below 20%.
New Zealand dollar (NZD) jumps as risk sentiment improves
The New Zealand dollar (NZD) also strengthened in overnight trade, as continued USD weakness helped to underpin market risk appetite.
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