Pound (GBP) firms despite UK growth downgrade
The pound (GBP) trended broadly higher through yesterday’s session, despite a sharp downgrade to UK economic growth expectations for 2026.
The International Monetary Fund’s (IMF) latest forecasts suggest the UK will be the G7 economy worst hit by the war in Iran, with UK GDP now expected to expand by 0.8%, against previous forecasts for a 1.3% expansion.
Bank of England (BoE) Governor Andrew Bailey is scheduled to speak later today, but may not offer any fresh direction for the pound, leaving GBP exchange rates to trade without direction.
Euro (EUR) subdued on ECB Lagarde remarks
The euro (EUR) softened on Tuesday, undermined by a prevailing risk-on bias and remarks from European Central Bank (ECB) President Christine Lagarde.
Speaking to Bloomberg, Lagarde stressed the need for a data-dependent approach to policy, dampening bets for an interest rate hike in the near-term.
The release of the Eurozone’s latest industrial production figures could provide some modest support to the euro today, if they confirm production returned to growth in February.
US dollar (USD) retreats on fresh peace talk hopes
The US dollar (USD) faced notable selling pressure yesterday, retreating to its worst levels since the start of the US-Iran war.
Investors continued to reduce their positions in the safe-haven currency, as US President Donald Trump claimed that peace talks with Iran could restart ‘over the next two days’.
No doubt the US dollar will continue to be influenced by Middle East sentiment today, with fresh peace hopes likely to extend the USD selling bias.
Canadian dollar (CAD) dented by falling oil prices
The Canadian dollar (CAD) ticked lower against most of its peers on Tuesday, undermined by a sizable drop in oil prices.
Looking ahead, movement in the ‘loonie’ is likely to continue to be influenced by oil price dynamics through today’s session.
Australian dollar (AUD) buoyed by hawkish RBA remarks
The Australian dollar (AUD) strengthened overnight amid a risk-on mood and hawkish comments from Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser.
New Zealand dollar (NZD) flat despite positive trade
The New Zealand dollar (NZD) traded in a narrow range overnight as the ‘kiwi’ was unable to capitalise on the risk-on market mood.
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