Pound (GBP) plunges amid BoE rate cut bets
The pound (GBP) plummeted yesterday as troubling UK employment data cemented bets for a Bank of England (BoE) interest rate cut in March.
The latest jobs report showed unemployment rising to a five-year high in the three months to December, while wage growth slowed to its lowest level since August 2024.
Sterling could come under additional pressure today following the release of the UK’s latest consumer price index. With inflation cooling, as expected, markets may price in a faster pace of policy easing from the BoE.
Euro (EUR) volatile amid mixed factors
The euro (EUR) faced turbulence yesterday, with EUR coming under pressure as Germany’s ZEW economic sentiment indicator unexpectedly declined.
However, the single currency’s downside was offset by a risk-off market mood, which supported it against riskier peers, and cautious optimism around Russia-Ukraine peace talks in Geneva.
Eurozone economic data is absent from today’s calendar. As a result, the euro could be mainly influenced by geopolitical developments and its negative correlation with the US dollar (USD).
US dollar (USD) spikes on upbeat jobs data
The US dollar initially firmed against many of its peers yesterday, as new US jobs data contained indications of a resilient labour market.
However, USD surrendered these gains at the end of the session, with some profit-taking undermining USD.
Looking ahead, a forecast 2% contraction in durable goods orders in December could pressure the US dollar today.
Canadian dollar (CAD) struggles as oil prices wobble
The Canadian dollar (CAD) wavered lower yesterday, as the crude-linked currency traded in tandem with oil prices.
Crude prices may drive CAD movement again today, amid a lack of Canadian data. If oil recovers, the ‘loonie’ could regain its footing.
Australian dollar (AUD) softens amid risk-off trade
The Australian dollar (AUD) edged lower in overnight trade as market sentiment soured.
New Zealand dollar (NZD) tumbles following RBNZ decision
The New Zealand dollar (NZD) plunged overnight as the Reserve Bank of New Zealand (RBNZ) struck a more dovish tone than expected following its decision to leave interest rates unchanged.
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