Pound (GBP) recovery tempered by budget anxiety
The pound (GBP) trended broadly higher through yesterday’s session, clawing back some of its losses from the end of last week.
However, Sterling’s gains remained limited in scope, amid ongoing concerns over the contents of Chancellor Rachel Reeves’s upcoming budget.
GBP investors will look to a speech by Bank of England (BoE) policymaker Swati Dhingra for fresh impetus on Tuesday. As one of the bank's most dovish members, her remarks could weigh on Sterling if she touches on policy.
Euro (EUR) fails to draw support from revised growth forecast
The euro (EUR) struggled to attract support on Monday as the single currency’s negative correlation with the US Dollar (USD) overshadowed upwardly revised Eurozone growth forecasts from the European Commission.
The EC raised its 2025 growth forecast from 0.9% to 1.3%, but attributed the upgrade to a temporary uptick in demand, as exports jumped in anticipation of US tariffs.
Notable Eurozone data is in short supply today, which could leave the euro to trade without direction.
US dollar (USD) firms on hawkish Fed bets
The US dollar got off to a positive start this week amid a further trimming of Federal Reserve interest rate expectations, with the odds of a December rate cut falling to just 44%.
Reinforcing the upside in USD was the risk-averse market mood, which bolstered demand for safe-haven assets like the ‘Greenback’.
Coming up, the latest ADP employment figures could temper USD demand today, if data for the last week of October points to another slowdown in the US labour market.
Canadian dollar (CAD) dips as inflation cools
The Canadian dollar (CAD) traded with modest losses on Monday as bets for another Bank of Canada (BoC) rate cut ticked higher, following a cooling of domestic inflation.
Oil price dynamics will likely drive movement in the ‘loonie’ today, with CAD exchange rates likely to falter if oil prices continue to weaken.
Australian dollar (AUD) slides as RBA leaves door open to rate cuts
The Australian dollar (AUD) remained on the defensive in overnight trade as the minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting revealed the bank expects rates to be higher for longer, but that another cut is possible if growth weakens.
New Zealand dollar (NZD) wavers in mixed trade
The New Zealand dollar (NZD) wobbled overnight on Monday, with initial losses quickly being pared as market risk sentiment improved.
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