Pound slumps as inflation falls ahead of Spring Statement

Pound (GBP) muted by downbeat sales data

The increasingly risk-sensitive pound (GBP) was mixed during yesterday’s session, as the cheery market mood saw it firm against safer peers while struggling against riskier rivals.

Meanwhile, a larger-than-expected slump in sales volumes reported by the Confederation of British Industry (CBI) stifled the pound’s upside potential, and the looming Spring Statement muted GBP.

Turning to today, Sterling has slumped this morning after cooler-than-forecast UK inflation stoked bets on a Bank of England (BoE) interest rate cut in May. Attention now turns to Chancellor Rachel Reeves’s Spring Statement, where spending cuts and gloomy growth forecasts could drive GBP even lower.

Euro (EUR) subdued despite positive German data

The euro (EUR) softened against its stronger rivals yesterday, despite Germany’s latest business climate indicator improving to an eight-month high in March.

A risk-on mood put some pressure on the safer euro, with the single currency struggling to attract support in spite of the upbeat German data and hopes of a breakthrough in Russia-Ukraine peace efforts.

The session ahead brings no notable Eurozone economic releases. Therefore, EUR may be driven by wider market trends and ongoing ceasefire negotiations in Ukraine.

US dollar (USD) slides amid risk-positive trade

The US dollar (USD) faced selling pressure yesterday as an improving market mood sapped demand for the safe-haven ‘greenback’.

In addition to signs of progress in Russia-Ukraine peace talks, markets were also relieved by the possibility that US President Donald Trump may take a less aggressive approach to tariffs.

This afternoon, the latest US durable goods orders figure is due out. An expected 1% contraction last month could weigh on USD.

Canadian dollar (CAD) unclear as oil prices waver

The crude-linked Canadian dollar (CAD) traded without a clear directional bias yesterday as wavering oil prices left the ‘loonie’ rudderless.

Later this evening, the minutes from the Bank of Canada’s (BoC) most recent rate decision are due to be published. Any signs that the bank is open to further cuts could pressure CAD.

Australian dollar (AUD) buoyed by budget optimism

The Australian dollar (AUD) briefly stumbled overnight after Australian inflation unexpectedly cooled. However, budget optimism saw AUD bounce back and strengthen overall.

New Zealand dollar (NZD) firms amid cheery mood

The New Zealand dollar (NZD) also gained ground in overnight trade, thanks to a cheerful mood among NZD investors.

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