The euro slumped on Thursday following the European Central Bank’s (ECB) latest interest rate decision.
Meanwhile, the pound is trending higher so far this morning, with GBP/EUR buoyed at €1.1554 and GBP/USD climbing to $1.1724. GBP/CAD has ticked up to C$1.5209, while GBP/AUD and GBP/NZD have rallied to AU$1.7020 and NZ$1.9093, respectively.
Looking ahead, will a slowdown in US inflation weaken the appeal of the US dollar later this afternoon?
The eurro came out on top at the start of this week, following the news that Ukraine had recaptured a large portion of occupied territory from Russian forces in the north east of the country.
What’s been happening?
The news stoked hopes for an end to the war and led to a pullback in European gas prices, much to the relief of EUR investors.
Reinforcing the upside in EUR exchange rates was speculation the ECB might deliver another 75bps hike at its next meeting in October.
The pound also benefitted from Ukraine optimism on Monday, with GBP investors shrugging off the UK’s weaker-than-expected GDP release.
Meanwhile, the US dollar stumbled yesterday, with demand for the safe-haven currency being undermined by a prevailing risk-on mood and a pullback in US Treasury yields.
The spotlight today is highly likely to be on the release of the US consumer price index.
What’s coming up?
August’s figures are expected to report US inflation slowed again in August. This could see USD investors to scale back their expectations for future interest rate hikes from the Federal Reserve and drag on the US dollar today.
In the meantime, the release of the UK’s latest jobs report earlier this morning appears to be providing some support for the pound so far today.
July’s release reported the unemployment rate fell to its lowest level since 1974, while wage growth also accelerated at a faster-than-expected pace.
Also coming up this morning will be the publication of Germany’s ZEW economic sentiment index. September’s index is expected to report sentiment in the Eurozone’s largest economy continued to deteriorate, potentially weakening the appeal of the single currency.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)