Pound (GBP) pressured by BoE rate cut expectations
The pound (GBP) trended broadly lower during yesterday’s session as investors continued to price in additional interest rate cuts from the Bank of England (BoE) this year.
On the other hand, Sterling was largely able to shrug off concerns over US President Donald Trump’s new tariffs on the expectation it would have a limited impact on UK GDP.
BoE Governor Andrew Bailey is scheduled to speak later today. If he reiterates the dovish messaging that followed last week’s meeting, the pound may come under pressure.
Euro (EUR) muted on ECB warning
The euro (EUR) came under pressure on Monday as an official at the European Central Bank (ECB) warned of the impact of Trump’s protectionist trade policies.
ECB Vice-President Luis de Guindos suggested the latest tariffs will create greater economic uncertainty in the Eurozone and warned against an EU-US trade war.
EUR data is in short supply today. This may see the euro struggle to find direction.
US dollar (USD) firms amid tariff uncertainty
The US dollar (USD) strengthened at the start of this week as markets digested Trump’s latest tariff threats.
In addition to announcing 25% tariffs on all steel and aluminium imports to the US, Trump threatened reciprocal tariffs against any country that currently imposes tariffs on US goods.
Coming up, Federal Reserve Chair Jerome Powell is set to testify before Congress later this afternoon. If Powell signals the bank may need to maintain higher rates in the face of persistent inflationary pressures, the US dollar is likely to rally.
Canadian dollar (CAD) pressured by metal tariff fears
The Canadian dollar (CAD) stumbled on Monday amid fears that Trump’s new tariffs could hit Canada the hardest due to the US being a key market for Canadian steel exports.
Coming up, any further losses for the ‘loonie’ could be tempered if oil prices continue to appreciate today.
Australian dollar (AUD) buoyed by upbeat data
The Australian dollar (AUD) trended higher overnight on Monday as Australia’s latest consumer and business confidence indexes both reported an improvement in morale.
New Zealand dollar (NZD) firms despite risk-off mood
The New Zealand dollar (NZD) found modest gains in overnight trade, with the ‘kiwi’ strengthening despite the broadly risk-off market mood.
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