Pound (GBP) struggles as post-budget tensions rise
The pound (GBP) stumbled yesterday as post-budget jitters continued to chip away at Sterling’s appeal.
Tensions between the Treasury and the Office for Budget Responsibility (OBR) unsettled GBP investors, following the chaotic leaks and briefings in the run-up to the budget.
The UK’s final services PMI for November is expected to confirm that activity in the vital services sector slowed to a near standstill last month. This could undermine the pound during today’s session.
Euro (EUR) uncertain following mixed inflation figures
The euro (EUR) was mixed yesterday, with the safer single currency initially struggling amid a risk-on market mood.
A mixed consumer price index then failed to provide EUR with a meaningful upside. Although headline inflation unexpectedly ticked higher in November, core inflation held steady, rather than rising as forecast.
Confirmation of a decent expansion in service sector activity could support EUR today. Attention then turns to a speech from European Central Bank (ECB) President Christine Lagarde. The euro could rise if she strikes a hawkish tone.
US dollar (USD) undermined by risk-on mood
The US dollar (USD) lacked support yesterday as a broadly upbeat market mood saw the safe-haven currency slip against stronger rivals.
Bets for a Federal Reserve interest rate cut next week also dampened USD demand, although a lack of fresh data meant movement was limited.
Looking forward, weak jobs data for November could weigh on the US dollar today. The ‘greenback’ is unlikely to draw support from the ISM services PMI either, with activity expected to have slowed slightly in November.
Canadian dollar (CAD) pressured as oil prices fall
The commodity-sensitive Canadian dollar (CAD) also edged lower against its more successful peers yesterday, with falling oil prices dragging on the ‘loonie’.
Crude prices could continue to drive the Canadian dollar today. With oil prices currently recovering, CAD could regain ground.
Australian dollar (AUD) firms despite lacklustre GDP
The Australian dollar (AUD) shrugged off an unexpected slowdown in Australian GDP overnight, with the risk-sensitive ‘Aussie’ ticking higher amid a positive market mood.
New Zealand dollar (NZD) surrenders overnight gains
The New Zealand dollar (NZD) also gained ground during last night’s risk-on trade, although the ‘kiwi’ has retreated this morning.
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