Pound (GBP) subdued despite forecast-beating inflation
The pound (GBP) weakened against some rivals yesterday, as hotter-than-forecast UK inflation failed to dampen Bank of England (BoE) interest rate cut bets.
While headline inflation rose from 3.2% to 3.4% in December, core inflation held steady at 3.2% and services inflation rose less than forecast. Markets still expect 50 basis points of cuts from the BoE over the next year.
The Confederation of British Industry’s (CBI) latest distributive trades survey could subdue Sterling today, if it shows a continued downturn in retail sales volumes in January.
Euro (EUR) struggles in absence of data
The euro (EUR) fell against its stronger peers yesterday and wavered elsewhere as a lack of notable data left EUR unsupported.
Comments from European Central Bank (ECB) President Christine Lagarde also failed to aid the common currency, as she said US tariffs would likely have a ‘minimal’ impact on inflation and that price pressures are ‘under control’.
Today, the ECB’s meeting minutes are due out. However, other external factors – including EUR’s negative correlation with the US dollar (USD) – could have a bigger impact on the euro.
US dollar (USD) selloff eases although tensions remain
The US dollar steadied somewhat yesterday, although it lost ground against stronger peers, as the recent USD selloff lost momentum.
Concerns over potential US-EU tensions, including around tariff threats and the dispute over Greenland, lingered but failed to trigger further heavy selling.
Looking ahead, USD investors may focus on the latest core PCE price index today. If the Federal Reserve’s preferred measure of inflation shows price pressures remained stubbornly high in November, a pullback in Fed rate cut bets could boost the ‘greenback’.
Canadian dollar (CAD) firms in tandem with oil
The commodity-linked Canadian dollar (CAD) ticked higher against some of its peers yesterday, with CAD boosted by an upward trend in oil prices.
Crude prices have wavered so far today, struggling to sustain the upside. The ‘loonie’ could face choppy trade if oil markets continue to wobble.
Australian dollar (AUD) soars as jobs data fuels RBA rate hike bets
The Australian dollar (AUD) jumped overnight after Australia’s latest jobs data smashed forecasts, with the unemployment rate easing from 4.3% to 4.1%, fuelling bets on a Reserve Bank of Australia (RBA) rate hike next month.
New Zealand dollar (NZD) buoyed by AUD correlation
The New Zealand dollar (NZD) inched higher overnight as the ‘kiwi’ enjoyed its positive correlation with the Australian dollar.
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.
