Pound (GBP) strengthened by BoE rate speculation
The pound (GBP) enjoyed broad support yesterday, with GBP/USD being propelled to a new one-week high.
The uptick in Sterling came as GBP investors pared their bets for future Bank of England (BoE) rate cuts, with many analysts now predicting the bank will deliver only one more cut in 2025.
In the absence of any notable UK economic releases, movement in the pound will likely be driven by wider market trends today. Concerns about the possibility of tax hikes in the government’s autumn budget could also exert some pressure on the pound.
Euro (EUR) buoyed by USD weakness
The euro (EUR) traded with modest gains on Monday, with the single currency drawing support from its negative correlation with the US dollar (USD).
However, ongoing EU-US trade tensions ultimately kept a lid on the euro's gains yesterday.
Turning to today's session, with the European Central Bank's (ECB) latest interest rate decision looming, movement in the euro may be suppressed as EUR investors err on the side of caution.
US dollar (USD) pressured by Fed jitters
The US dollar opened this week on the defensive, amid persistent concerns over the future independence of the Federal Reserve.
Despite denying plans to dismiss Fed Chair Jerome Powell last week, President Donald Trump continues to pile political pressure on the US central bank to cut interest rates.
A scheduled speech by Powell will keep the Fed front and centre today. If he remains defiant in the face of Trump's criticism, it could help revive USD demand.
Canadian dollar (CAD) weakens in tandem with oil prices
The Canadian dollar (CAD) ticked lower on Monday, with the commodity-linked 'loonie' being undermined as softer oil prices offset an uptick in Canadian producer prices.
If oil prices continue to depreciate, it's likely CAD exchange rates will remain on the defensive today.
Australian dollar (AUD) slides following RBA minutes
The Australian dollar (AUD) trended lower overnight on Monday, following the release of the minutes from the Reserve Bank of Australia's (RBA) July policy meeting, which showed that policymakers believe further rate cuts are warranted.
New Zealand dollar (NZD) undermined by RBNZ rate cut speculation
The New Zealand dollar (NZD) also retreated in overnight trade, with the 'kiwi' being pressured by expectations of an interest rate cut from the Reserve Bank of New Zealand (RBNZ) next month, following Monday's soft inflation print.
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