Pound (GBP) pressured by budget uncertainty
The pound (GBP) stumbled over the finishing line last week, following reports that Chancellor Rachel Reeves is ditching plans to raise income tax in her autumn budget.
The news spooked investors as it appeared to dent the Chancellor's fiscal credibility, before separate reports emerged suggesting the government is facing a smaller fiscal blackhole than previously feared, allowing Sterling to claw back a small portion of its losses.
In the absence of any notable GBP economic releases, UK budget speculation may continue to infuse volatility into the pound at the start of this week.
Euro (EUR) buoyed by cautious mood
The euro (EUR) ticked higher on Friday, as demand for safe-haven assets reflected positively on the single currency.
EUR exchange rates were also supported by the Eurozone’s latest GDP figures, which confirmed growth in the bloc accelerated to 0.2% in the third quarter.
Eurozone data is thin on the ground today, which may leave the euro without any directional bias.
US dollar (USD) finds fleeting gains on fading Fed rate cut bets
The US dollar (USD) firmed at the end of last week amid a trimming of Federal Reserve interest rate cut bets, with the odds of a December cut falling below 50%.
However, these gains were trimmed by the end of Friday’s session, with USD investors growing cautious as they braced for an expected rush of US economic releases delayed by the US government shutdown.
Speculation that this data could prove underwhelming and trigger a dovish repricing of Fed rate expectations may keep a lid on the US dollar at the start of this week.
Canadian dollar (CAD) bolstered by rising oil prices
The Canadian dollar (CAD) closed last week’s session on positive footing, bolstered by a rise in oil prices following Ukrainian drone strikes on a Russian depot.
Coming up, Canada’s latest CPI figures may help to extend the upside in CAD at the start of this week if inflation remained elevated in October.
Australian dollar (AUD) dented by cautious market mood
The Australian dollar (AUD) faced headwinds at the start of this week, with the risk-sensitive currency weakening in overnight trade as a stronger US dollar fed into broader risk-off flows.
New Zealand dollar (NZD) fluctuates on mixed PMIs
The New Zealand dollar (NZD) traded in a wide range through Monday’s Asian trading session in response to uneven domestic PMI releases.
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