Pound (GBP) jumps as jobs data beats forecasts
The pound (GBP) strengthened yesterday as stronger-than-expected British jobs data tempered bets on further interest rate cuts from the Bank of England (BoE).
Although the latest report indicates that the UK labour market continues to cool, the slowdown was far less pronounced than feared, leading market participants to further scale back expectations for BoE rate cuts.
Turning to today, Sterling may be muted as GBP investors exercise caution ahead of tomorrow’s UK GDP figures, which have the potential to sink the pound.
Euro (EUR) rebounds as USD declines
The euro (EUR) initially faced a challenge at the start of yesterday’s session due to a larger-than-forecast decline in German economic sentiment in August.
However, EUR was able to rebound strongly in the afternoon, thanks to the euro’s strong negative correlation with a tumbling US dollar (USD).
Germany’s final inflation reading for July is unlikely to impact EUR today, unless it deviates from the preliminary estimate. As a result, the euro may be primarily driven by Ukraine news and USD movement.
US dollar (USD) plunges as Trump lambasts Fed chief
The US dollar fell yesterday as US President Donald Trump intensified his attacks on Federal Reserve Chair Jerome Powell after a softer US consumer price index.
After US inflation held steady in July at 2.7%, rather than rising to 2.8%, Trump took to social media to say we as ‘considering allowing a major lawsuit against Powell to proceed’. This reignited concerns about the Fed’s independence and weighed heavily on USD.
These worries could continue to pressure the US dollar today after US Treasury Secretary Scott Bessent called for a 50bps interest rate cut at the Fed’s next meeting.
Canadian dollar (CAD) slips as oil prices fall
The crude-linked Canadian dollar (CAD) fell against its stronger peers yesterday, with declining oil prices and the drop in USD both dragging on the ‘loonie’.
Oil price movements may continue to determine CAD’s direction again today. If crude prices weaken again, the Canadian dollar could struggle.
Australian dollar (AUD) uncertain in mixed trade
The Australian dollar (AUD) traded in a wide range overnight amid a lack of data and a mixed market mood.
New Zealand dollar (NZD) buoyed by uptick in card spending
The New Zealand dollar (NZD) received a boost last night thanks to a surprise rise in credit card spending in New Zealand in July, indicating stronger-than-expected consumer activity.
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