Pound (GBP) slides as UK inflation cools and growth slashed
The pound (GBP) proved to be Wednesday’s worst performer, with initial losses following a weaker-than-expected inflation print which revived bets for a Bank of England (BoE) interest rate cut in May.
The GBP selling bias was then reinforced after UK Chancellor Rachel Reeves delivered her Spring Statement, outlining cuts to public spending as well as confirming the UK’s growth forecast for 2025 has been cut in half.
Coming up, BoE policymaker Dr. Swati Dhingra is set to speak today. As one of the most dovish members of the BoE her remarks could extend the Sterling selloff if she reinforces bets for a May rate cut.
Euro (EUR) trades sideways in absence of data
The euro (EUR) traded without strong direction on Wednesday amid the absence of any notable Eurozone economic releases.
While the single currency was underpinned by its negative correlation with the US dollar (USD), ongoing concerns over a potential EU-US trade war kept a lid on the euro.
In the continued absence of any EUR data of note, the euro may be left adrift again today.
US dollar (USD) rocked by latest Trump tariffs
The US dollar traded in a wide range during yesterday’s European session. The currency stumbled through the first half of the session amid a risk-positive mood, before the initial reaction to US President Donald Trump’s new car tariffs revived USD demand.
However, the US dollar retreated again in overnight trade as markets digested Trump’s tariff announcement and were left with fresh concerns over how it might impact the US economy.
The US will publish its finalised GDP figures for the last quarter of 2024 later today. If these confirm US economic growth slowed to its lowest levels since early 2024, the ‘greenback’ is likely to remain on the back foot.
Canadian dollar (CAD) bolstered by rising oil prices
The Canadian dollar (CAD) strengthened on Wednesday as a rise in oil prices made the commodity-linked currency more attractive to investors.
CAD data remains in short supply today, likely leaving the ‘loonie’ to continue to be driven by oil price dynamics.
Australian dollar (AUD) firms amid USD weakness
The Australian dollar (AUD) trended higher overnight as the pullback in the US dollar made the risk-sensitive ‘Aussie’ more attractive to investors.
New Zealand dollar (NZD) shrugs off tariff concerns
The New Zealand dollar (NZD) also firmed in overnight trade as the weakness of the US dollar offset risk aversion stemming from Trump’s latest tariff threat.
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