Pound (GBP) muted on downbeat UK growth forecast
The pound (GBP) was subdued through yesterday’s session amid forecasts for a notable slowdown in UK economic growth in 2026.
Analysts at KPMG predict the UK economy will expand by just 1% next year, as rising unemployment and weak consumer sentiment weigh on growth.
UK economic data is in short supply today, potentially leaving the pound directionless through today’s session.
Euro (EUR) buoyed by USD weakness
The euro (EUR) strengthened on Monday, with the single currency drawing the bulk of its support from its negative correlation with the US dollar (USD).
This allowed the euro to shrug off November’s downwardly revised Eurozone manufacturing PMI.
The spotlight today will be on the Eurozone’s latest consumer price index, with the euro likely to firm if a rise in inflation last month cements expectations that the European Central Bank’s (ECB) cutting cycle is over.
US dollar (USD) pressured by dovish Fed bets
The US dollar got off to a poor start this week, amid growing confidence that the Federal Reserve will cut interest rates next week.
These losses were then compounded by the latest ISM manufacturing PMI, which reported a deeper-than-expected contraction in the US factory sector last month.
Looking ahead, positive risk flows are likely to continue to limit the US dollar's upside potential today.
Canadian dollar (CAD) steady as oil prices rise
The Canadian dollar (CAD) held its ground on Monday, with the commodity-linked currency drawing support from rising oil prices.
The ‘loonie’ is likely to remain sensitive to oil price dynamics through today’s session, potentially carving out some gains if crude continues to appreciate.
Australian dollar (AUD) firms in upbeat trade
The Australian dollar (AUD) trended higher overnight on Monday, underpinned by positive risk flows and hawkish Reserve Bank of Australia (RBA) bets.
New Zealand dollar (NZD) rangebound despite improving risk appetite
The New Zealand dollar (NZD) traded sideways during the overnight session, with potential gains stemming from the upbeat market mood being offset by concerns over New Zealand’s economic outlook.
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