Pound (GBP) mixed amid interest rate ‘uncertainty’
The pound (GBP) fluctuated throughout yesterday’s session as investors digested mixed signals from Bank of England (BoE) Governor Andrew Bailey.
Addressing the Treasury Select Committee, Bailey reaffirmed that interest rates are likely to head lower but noted that the timing and extent of cuts are now ‘shrouded in a lot more uncertainty’.
Looking ahead, Sterling may react to the UK’s final services PMI for May. An upward revision could lend support to the currency.
Euro (EUR) drifts lower as inflation undershoots ECB goal
The euro (EUR) softened on Tuesday after the latest inflation data came in below forecasts.
Consumer price inflation across the Eurozone dropped from 2.2% to 1.9% in May, falling below the European Central Bank’s (ECB) 2% target and reinforcing expectations for a rate cut on Thursday.
This morning’s final services PMI from the bloc may move the euro, though market participants may remain cautious ahead of the ECB announcement.
US dollar (USD) rises as risk appetite fades
The US dollar (USD) strengthened yesterday, buoyed by a shift in market sentiment towards safer assets.
Adding further support was a stronger-than-expected JOLTs report, showing a surprise rise in US job openings for April.
Traders will now turn their attention to today’s US data. Forecasts point to an increase in both the ADP employment figure and the ISM services PMI for May, which could provide more lift for the ‘greenback’.
Canadian dollar (CAD) tracks oil rebound
The Canadian dollar (CAD) followed oil prices yesterday, dipping initially before recovering as crude markets rebounded later in the day.
Today, CAD could be influenced by the Bank of Canada’s (BoC) latest interest rate decision. While no change is anticipated, the loonie may soften if the BoC delivers a cautious outlook for Canada’s economy.
Australian dollar (AUD) unsteady following soft GDP
The Australian dollar (AUD) was subdued overnight after first-quarter GDP data revealed a larger-than-expected slowdown in growth.
However, upbeat global risk sentiment helped limit AUD losses despite the domestic economic disappointment.
New Zealand dollar (NZD) trades sideways in quiet session
The New Zealand dollar (NZD) remained rangebound during last night’s session, with a lack of local economic releases keeping the ‘kiwi’ confined to a narrow band.
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