Pound (GBP) rallies amid Chancellor rumours
The pound (GBP) climbed yesterday, as GBP investors responded positively to reports that incoming Prime Minister Andy Burnham is likely to appoint Shabana Mahmood rather than Ed Miliband as Chancellor of the Exchequer.
Miliband, who had been the frontrunner to head up the Treasury, is seen as less market-friendly than Mahmood, with investors hoping the latter will be more fiscally cautious.
Turning to today, the UK’s latest GDP figures are in the spotlight for GBP investors. A 0.1% rebound in growth may offer the pound modest support.
Euro (EUR) firms despite mixed data
The euro (EUR) initially wavered yesterday, as industrial production in the bloc unexpectedly contracted in May, although output was revised higher in April.
However, the single currency managed to strengthen in the afternoon thanks to its strong negative correlation with the US dollar (USD), as the latter currency declined.
Market-moving Eurozone data is in short supply today, potentially leaving the single currency to trade without a clear directional bias once again.
US dollar (USD) pressured as soft CPI continues to weigh
The US dollar remained under pressure yesterday as the steep slowdown in US inflation, published on Tuesday, continued to weigh on USD exchange rates.
A surprise decline in US producer prices applied fresh pressure on USD on Wednesday afternoon, with the latest monthly PPI figure printing at -0.3%.
Looking ahead, a forecast slowdown in US retail sales in June could dent the US dollar later today.
Canadian dollar (CAD) slips following BoC decision
The Canadian dollar (CAD) retreated yesterday as the Bank of Canada (BoC) struck a broadly cautious tone after leaving interest rates unchanged.
Today, oil price dynamics may drive CAD exchange rates, amid a lack of Canadian economic data. If crude climbs, the commodity-sensitive ‘loonie’ could also gain ground.
Australian dollar (AUD) slips on softer inflation expectations
The Australian dollar (AUD) softened slightly overnight as Australian consumer inflation expectations unexpectedly eased in July.
New Zealand dollar (NZD) stable amid lukewarm mood
The New Zealand dollar (NZD) held steady overnight, with the ‘kiwi’ remaining supported despite a mixed market mood.
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