Pound (GBP) steadies following positive data
The pound (GBP) stabilised at the end of last week, with the release of better-than-expected UK economic indicators.
The UK’s latest retail sales and PMI releases surprised to the upside, tempering recent bets the Bank of England (BoE) might cut interest rates in December.
The Confederation of British Industry (CBI) will publish its latest distributive trades index at the start of this week. If the index points to a further deceleration in retail sales volumes, the pound may weaken.
Euro (EUR) climbs on USD weakness
The euro (EUR) traded with modest gains at the end of last week, thanks to the single currency’s negative correlation with the US dollar (USD).
The Eurozone’s own PMIs also bolstered EUR sentiment, as October’s preliminary figures showed the bloc enjoyed its sharpest expansion in private sector growth since May 2024.
Germany’s latest IFO business climate index will be the most notable economic release today. Expect the euro to weaken if sentiment deteriorates again this month.
US dollar (USD) slides on inflation miss
The US dollar stumbled on Friday after the latest US consumer price index reported a softer-than-expected increase in headline inflation and an unexpected dip in core inflation.
The slightly weaker-than-forecast CPI data is sapping USD sentiment, reinforcing bets that the Federal Reserve will deliver another 50bps of interest rate cuts by the end of 2025.
Turning to the start of this week, a sense of caution ahead of the Fed’s interest rate decision on Wednesday could limit movement in the US dollar.
Canadian dollar (CAD) slides as Trump terminates trade talks
The Canadian dollar (CAD) tumbled on Friday, after US President Donald Trump announced the end to all trade negotiations with Canada in response to a Canadian television advert critical of his tariffs.
If US-Canadian trade tensions continue to flare, it's likely the ‘loonie’ will remain on the defensive at the start of this week.
Australian dollar (AUD) jumps on US-China trade optimism
The Australian dollar (AUD) rocketed higher through Monday’s Asian trading session, on the news that the US and China had agreed a ‘framework’ for a trade deal ahead of a meeting between US President Donald Trump and his Chinese counterpart, Xi Jinping.
New Zealand dollar (NZD) strengthens in risk-on trade
The New Zealand dollar (NZD) also rallied overnight as easing US-China trade tensions bolstered market risk appetite.
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