Pound (GBP) falters as UK GDP stalls
The pound (GBP) closed last week on a sour note as the UK’s latest GDP figures reported the UK economy stalled in July.
The stagnation of growth at the start of the third quarter dragged on Sterling, as it will make it even more difficult for Rachel Reeves to close the gap in public finances without resorting to substantial tax hikes in her autumn budget.
Looking ahead, in a week packed with high-impact UK economic releases and the Bank of England’s (BoE) latest interest rate decision, GBP investors may be wary of making any aggressive bets today.
Euro (EUR) subdued amid European security concerns
The euro (EUR) was muted on Friday amid fresh concern over European security, following the incursion by Russian drones into Poland earlier in the week.
This came as Poland refuted suggestions that the incursions may have been a mistake, while the Kremlin claimed any peace talks with Ukraine are on ‘pause’ as the EU launched new sanctions on Russia.
In the absence of any Eurozone data of note, movement in the euro is likely to be linked to wider market trends at the start of this week.
US dollar (USD) gains capped by weakening morale
The US dollar (USD) trended broadly higher at the end of last week, with the safe-haven currency attracting skittish investors.
However, these gains were trimmed as the week’s session came to a close, as the University of Michigan’s US consumer sentiment index reported that household morale deteriorated more than expected this month.
Turning to the start of this week, movement in the US dollar may be limited ahead of the Federal Reserve’s highly anticipated interest rate decision on Wednesday.
Canadian dollar (CAD) supported by rising oil prices
The Canadian dollar (CAD) was steady on Friday, with the commodity-linked currency being underpinned by a rise in oil prices as the EU moved to block Russian energy imports.
The ‘loonie’ is likely to remain sensitive to oil price movement at the start of this week, potentially buoying CAD exchange rates if crude prices continue to climb.
Australian dollar (AUD) buoyed by softening USD demand
The Australian dollar (AUD) trended higher through Monday’s Asian trading session, with a slide in the US dollar helping to boost market risk appetite, despite underwhelming economic data from China.
New Zealand dollar (NZD) firms in risk-on trade
The New Zealand dollar (NZD) also trended higher in overnight trade thanks to the positive risk sentiment.
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