Pound (GBP) firms on hawkish BoE signals
The pound (GBP) strengthened yesterday in the wake of the Bank of England’s (BoE) final interest rate decision of the year.
While the BoE cut rates as expected and lowered its inflation forecast, its policy statement also suggested that future judgements to ease policy will become ‘a closer call’, indicating the pace of future cuts may be slower.
Meanwhile, the release of the UK’s latest retail sales figures may reverse Sterling’s gains today, after reporting sales growth unexpectedly contracted last month.
Euro (EUR) stumbles as ECB wary of EUR strength
The euro (EUR) ticked lower on Thursday as the European Central Bank (ECB) also delivered its last rate decision of 2025.
While the ECB left rates on hold and revised its growth forecasts higher, ECB President Christine Lagarde’s comments warning that a ‘stronger euro could bring down inflation’ acted as a headwind for the single currency.
Germany’s latest consumer confidence index may weigh on the euro today, as sentiment heading into January fell to its lowest level since April 2024.
US dollar (USD) slides on soft CPI print
The US dollar (USD) retreated during yesterday’s session after the latest US consumer price index reported US inflation fell from 3% to 2.7%.
The shock drop in inflation reinforced the recent USD selling bias as it stoked bets for more monetary easing from the Federal Reserve in 2026.
Closing out this week’s session will be the publication of the University of Michigan’s latest consumer sentiment index. If December’s finalised figures confirm an improvement in morale, it may help to underpin the US dollar.
Canadian dollar (CAD) flat as oil prices stall
The Canadian dollar (CAD) was trapped in a narrow range on Thursday, as oil prices stalled.
Coming up, the ‘loonie’ may strengthen later today if Canada’s latest retail sales data reports that sales growth rebounded in November.
Australian dollar (AUD) muted in cautious trade
The Australian dollar (AUD) was subdued overnight on Thursday, as a cautious market mood sapped demand for the risk-sensitive ‘Aussie’.
New Zealand dollar (NZD) slips as risk sentiment softens
The New Zealand dollar (NZD) retreated in overnight trade, with the ‘kiwi’ falling foul of the risk-off sentiment.
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