Pound (GBP) plunges as UK inflation cools
The pound (GBP) slumped yesterday after the UK’s consumer price index for November missed forecasts and fuelled Bank of England (BoE) interest rate cut bets.
Headline inflation cooled from 3.6% to 3.2%, a much faster slowdown than the 3.5% expected, while core inflation unexpectedly eased from 3.4% to 3.2%.
Attention now turns to the BoE’s interest rate decision today. A 25bps rate cut is almost fully priced in, but Sterling could fall further if the bank strikes a dovish tone.
Euro (EUR) see-saws ahead of ECB decision
The euro (EUR) initially softened yesterday as EUR suffered from its strong negative correlation with a rising US dollar (USD).
However, the single currency regained ground in the afternoon as USD retreated and markets looked ahead to the European Central Bank (ECB) policy decision today.
The ECB is set to leave rates unchanged, while many analysts expect the bank to lift growth forecasts and strike a slightly more hawkish tone than at previous meetings. This could lift the euro today.
US dollar (USD) retreats amid dovish Fed comments
The US dollar rose through the first part of yesterday’s session amid a souring market mood and a modest pullback in Federal Reserve interest rate cut bets.
However, USD retreated in the afternoon as an improving mood dampened demand for the safe-haven currency and dovish comments from Fed policymaker Christopher Waller undermined USD.
The latest US CPI figures could provide the ‘greenback’ with fresh impetus today. Cooling inflation could dent USD while stubborn price pressures would likely lift the currency.
Canadian dollar (CAD) struggles despite uptick in oil
The crude-linked Canadian dollar (CAD) traded without a clear direction yesterday, with the currency even struggling to hold on to gains against weaker rivals, despite an uptick in oil prices.
Canadian data is absent from the calendar again today. If oil extends its upside, CAD could potentially gain ground.
Australian dollar (AUD) wavers amid rising USD and stronger commodities
The Australian dollar (AUD) softened overnight amid a recovery in the US dollar, however AUD managed to recoup its initial losses thanks to a rise in commodity prices.
New Zealand dollar (NZD) softens despite upbeat GDP
The New Zealand dollar (NZD) weakened overnight despite stronger-than-expected GDP figures, as the 1.1% recovery in the economy in the third quarter failed to move the dial on Reserve Bank of New Zealand (RBNZ) policy expectations.
Never miss a movement. Create a free account with Currencies Direct to get the latest currency news delivered straight to your inbox. You can also set up rate alerts and check live rates 24/7.
