Pound (GBP) flat amid by-election jitters
The pound (GBP) traded in a narrow range yesterday as GBP investors turned their attention towards the upcoming Makerfield by-election.
Given the potential political implications of the election, investors were wary of betting too aggressively on Sterling, despite a sharp drop in UK bond yields.
Looking ahead, movement in the pound may remain limited today as markets also brace for the Bank of England’s (BoE) upcoming interest rate decision.
Euro (EUR) firms amid USD weakness
The euro (EUR) appreciated on Monday as demand for the single currency was underpinned by its inverse trade relationship with the US dollar (USD).
Aiding the euro’s ascent were growing bets that the European Central Bank (ECB) will continue to hike interest rates in the months to come.
Coming up, the publication of Germany’s latest ZEW economic sentiment index could apply pressure to the euro today if morale in the Eurozone’s largest economy remained in negative territory this month.
US dollar (USD) slumps on Middle East peace hopes
The US dollar stumbled out of the gates this week after it was announced that the US and Iran had agreed upon a framework for a peace deal.
While positive risk flows sapped demand for the safe-haven currency, the weakness in the dollar was fairly modest, with investors still wary about Israel’s continued military operations in Lebanon.
Turning to today’s session, the US dollar has already begun to claw back some of yesterday’s losses. Investors are becoming increasingly cautious as they await more information regarding the terms of the peace deal.
Canadian dollar (CAD) retreats as oil prices slump
The Canadian dollar (CAD) also weakened on Monday as a sharp drop in global oil prices sapped demand for the commodity-linked currency.
The ‘loonie’ is likely to extend these losses through today’s session if crude prices continue to slide.
Australian dollar (AUD) slips as RBA leaves rates on hold
The Australian dollar (AUD) tracked lower through Tuesday’s Asian trading session as the Reserve Bank of Australia (RBA) left interest rates on hold following its latest policy meeting, while also striking a more cautious note regarding future hikes.
New Zealand dollar (NZD) softens as risk demand weakens
The New Zealand dollar (NZD) also stumbled in overnight trade as risk appetite began to fade.
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