Pound (GBP) undermined by by-election result
The pound (GBP) closed last week’s session on the defensive, amid fresh political uncertainty in the UK.
Labour’s loss in the Gorton and Denton by-election raised fresh questions over Keir Starmer’s leadership of the party as well as the future of his premiership.
GBP investors will look to a speech by Bank of England (BoE) policymaker Alan Taylor for fresh impetus today. As one of the most dovish members of the Monetary Policy Committee, his remarks may have a negative impact on Sterling.
Euro (EUR) firms despite slowing German inflation
The euro (EUR) ticked higher on Friday, with EUR investors unfazed by Germany’s latest consumer price index.
While inflation slowed at a faster-than-expected pace last month, it was not enough to raise doubts over the European Central Bank’s (ECB) policy direction.
Meanwhile, Germany’s latest retail sales figures look set to act as a headwind for the euro today, after reporting a larger-than-expected contraction in consumer spending at the start of the year.
US dollar (USD) buoyed by stronger-than-expected PPI
The US dollar (USD) firmed at the end of last week as US producer price inflation surprised to the upside in January, accelerating from 0.4% to 0.5% against forecasts it would cool to 0.3%.
The rise in factory gate prices boosted USD as it reinforces expectations that the Federal Reserve will keep interest rates on hold for longer.
Turning to the start of this week, we are likely to see geopolitical uncertainty in the wake of the US-led strikes on Iran bolster the US dollar’s safe-haven appeal.
Canadian dollar (CAD) slides on disappointing GDP print
The Canadian dollar (CAD) trended broadly lower on Friday, after Canada’s latest GDP figures reported the country’s economy shrank by 0.2% in the last quarter of 2025.
Looking ahead, the surge in oil prices following the dramatic escalation of tensions in the Middle East over the weekend is likely to benefit the commodity-linked ‘loonie’ today.
Australian dollar (AUD) volatile amid geopolitical uncertainty
The Australian dollar (AUD) fluctuated through Monday’s Asian trading session, initially tumbling amid the risk-aversion triggered by the US and Israeli attacks on Iran, before paring the bulk of these losses before the start of the European session.
New Zealand dollar (NZD) fluctuates amid choppy conditions
The New Zealand dollar (NZD) was also volatile in overnight trade as concerns about the Middle East rippled through markets.
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