Pound (GBP) drifts lower amid fiscal concerns
The pound (GBP) weakened on Tuesday after the UK reported a higher-than-expected level of public sector borrowing in June, sparking worries about the potential for additional tax hikes later in the year.
While the Office for Budget Responsibility (OBR) noted that borrowing figures still matched its March projections and that the second half of 2025 could improve, GBP investors remained cautious and Sterling slipped.
GBP exchange rate movements may be limited today, with traders likely to wait for more influential UK data set for release in the coming days.
Euro (EUR) directionless amid trade tensions
The euro (EUR) lacked clear momentum yesterday, as a dearth of Eurozone economic releases and ongoing ambiguity in EU-US trade negotiations kept investors on the sidelines.
Although Brussels appears open to a trade arrangement skewed toward the US, there are reports that the EU may activate ‘anti-coercion’ tools should talks collapse without agreement.
The Eurozone’s consumer sentiment index lands today, though investors may hold off on big euro moves until after tomorrow’s European Central Bank (ECB) decision.
US dollar (USD) soft as markets weigh policy risks
The US dollar (USD) dipped slightly on Tuesday, weighed down by investor concerns surrounding American trade and monetary policy direction.
With President Donald Trump’s tariff deadline drawing near and continued political pressure on Federal Reserve Chair Jerome Powell to cut interest rates, the dollar failed to find much support.
Today’s sparse US economic calendar means broader risk sentiment could play a stronger role in influencing USD exchange rates.
Canadian dollar (CAD) firms despite oil headwinds
The Canadian dollar (CAD) managed modest gains yesterday, shrugging off a downturn in crude oil prices as the commodity-linked currency found support elsewhere.
With no notable Canadian releases today, the ‘loonie’ is likely to remain sensitive to fluctuations in global oil markets.
Australian dollar (AUD) rises on trade hopes
The Australian dollar (AUD) climbed overnight, buoyed by optimism that the US may extend its tariff timeline with China and progress trade discussions with Japan, both of which lifted demand for the risk-sensitive ‘Aussie’.
New Zealand dollar (NZD) strengthens as sentiment improves
The New Zealand dollar (NZD) followed suit, gaining ground amid upbeat global market sentiment that encouraged risk-on positioning and helped the ‘kiwi’ rally.
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