Pound (GBP) slumps amid UK fiscal fears
The pound (GBP) plunged to multi-month lows yesterday amid mounting anxiety ahead of the upcoming autumn budget.
News that the Office for Budget Responsibility (OBR) will announce a steeper-than-anticipated downgrade to its productivity growth projections ahead of the budget, resulting in a £20bn hit to the public finances, fuelled fears that Chancellor Rachel Reeves will have to hike taxes next month.
Amid a lack of notable data releases today, budget jitters could continue to impact the pound. If attention remains focused on the challenges facing the Chancellor, Sterling could weaken.
Euro (EUR) slips amid geopolitical concerns
The euro (EUR) fell against its stronger rivals yesterday as growing EU-Russia tensions undermined the single currency.
Recent airspace incursions, cyberattacks and weapons tests by Russia have rattled EUR investors, as the geopolitical risks of the Russia-Ukraine war threaten other European countries.
Eurozone economic data is thin on the ground today, which could leave the euro to trade without a clear direction, particularly ahead of some high-impact events tomorrow.
US dollar (USD) softens as risk appetite returns
The US dollar (USD) faced mixed movement yesterday, although the safe-haven ‘greenback’ eventually weakened against many of its rivals amid a risk-on market mood.
While signs of positive trade discussions between the US and Brazil, Japan and China lent USD modest support, they ultimately added to a buoyant mood among global investors, thereby depriving the American dollar of safe-haven support.
Today, USD investors may remain cautious ahead of tonight’s Federal Reserve policy announcement. A dovish cut this evening could sink the ‘greenback’.
Canadian dollar (CAD) firms amid oil forecasts
The crude-linked Canadian dollar (CAD) strengthened yesterday, despite a dip in oil prices, amid expectations that new EU and US sanctions on Russian oil, as well as Ukrainian attacks on Russian refineries, could push oil prices higher in the coming months.
Looking ahead, the Bank of Canada’s (BoC) upcoming interest rate decision is in the spotlight for CAD investors. An expected 25bps cut could weigh on the ‘loonie’.
Australian dollar (AUD) climbs as inflation beats forecasts
The Australian dollar (AUD) leapt higher overnight after Australian inflation surged from 2.1% to 3.2% in the third quarter, dampening bets on another Reserve Bank of Australia (RBA) rate cut in the near future.
New Zealand dollar (NZD) rises in tandem with AUD
The New Zealand dollar (NZD) also rose overnight, thanks to NZD’s positive correlation with AUD and a risk-on mood in markets.
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.
