Pound (GBP) continues to fall amid budget anxiety
The pound (GBP) extended its recent selloff yesterday, with GBP/EUR hitting a near two-and-a-half-year low, as pressures continued to mount on Chancellor Rachel Reeves ahead of the UK autumn budget.
Sterling’s losses were compounded by bets that the challenges facing the British economy could encourage the Bank of England (BoE) to cut interest rates again before the end of the year.
These factors may continue to weigh on the pound during today’s session, as fresh UK economic data remains in short supply.
Euro (EUR) stumbles as risk appetite improves
The euro (EUR) wavered lower against many of its peers yesterday as a lack of data and a risk-on mood exposed the safer single currency to losses.
EUR also struggled to attract support ahead of today’s Eurozone GDP figures, which are forecast to show that growth remained at a near standstill in the third quarter.
If the GDP data today does show that the Eurozone economy has practically stalled, expect to see the euro soften. The European Central Bank (ECB) will also announce its latest rate decision today, which could infuse EUR with volatility.
US dollar (USD) rebounds on Fed Powell’s cautious comments
The safe-haven US dollar (USD) fell against its stronger rivals yesterday as a buoyant mood swept markets, thereby dampening USD’s appeal.
However, the ‘greenback’ bounced back in the evening following the Federal Reserve decision. Although the bank cut rates, as expected, Fed Chair Jerome Powell said that another cut in December was ‘far from’ a forgone conclusion.
USD could continue to enjoy some support from yesterday’s Fed decision today amid an ongoing lack of US data. Elsewhere, global risk dynamics could drive the US dollar.
Canadian dollar (CAD) firms as BoC indicates rates may be neutral
The Canadian dollar (CAD) rallied yesterday, despite an expected 25-basis-point rate cut from the Bank of Canada (BoC), as the central bank indicated that it may be done cutting rates.
Tailwinds following the BoC decision may continue to support CAD today. Elsewhere, oil price dynamics may influence the commodity-linked currency, with a recent dip potentially pressuring the ‘loonie’.
Australian dollar (AUD) flat amid uncertain risk appetite
The Australian dollar (AUD) traded sideways overnight as the hawkish Fed decision and a US-China trade agreement led to a mixed market mood.
New Zealand dollar (NZD) rangebound despite strong data
The New Zealand dollar (NZD) wavered in overnight trade, as an unexpectedly strong recovery in New Zealand business confidence in October failed to provide NZD with meaningful gains.
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