The Pound sterling (GBP) rose to around 1.3000 against the US dollar (USD) during the London trading session on Thursday. The GBP/USD pair is currently trading at 1.2988, with the US dollar suffering a slight decline ahead of important economic data today and tomorrow. The US Dollar Index (DXY), which measures the performance of the dollar against six major currencies, is testing the 104.00 area.
The decline in the value of the dollar comes after data on weaker-than-expected US GDP growth in the third quarter offset positive employment data from ADP for October, which showed 233,000 jobs added compared to 159,000 in September.
Investors are now looking ahead to the US Non-Farm Payrolls (NFP) data for October, due out on Friday.
which is expected to show 115,000 jobs added, down from 254,000 in September. The unemployment rate is also expected to remain steady at 4.1%.
Any signs of slowing job growth could push the Fed towards more dovish monetary policy.
while strong numbers will bolster its stance. According to the CME FedWatch tool, there is a 25bp rate cut expected at the next two policy meetings in November and December.
In other news, investors are focusing today on the US Personal Consumption Expenditures (PCE) price index for September, due at 12:30 GMT. Core inflation is expected to grow by 2.6%, down from 2.7% in August.
Sterling steady after Autumn Budget
The pound managed to hold its ground against most major currencies this morning, and rose particularly against more volatile currencies.
after the UK’s much-anticipated Autumn Budget was announced. British Chancellor Rachel Reeves presented a package of tax increases expected to total £40bn, weighing on the pound’s exchange rate.
Daily Market Brief: Sterling outperforms majors
The pound was strong on Thursday, outperforming most of its peers.
as traders dampened expectations of a strong interest rate cut by the Bank of England (BoE) after the UK Labor government released its first autumn outlook statement on Wednesday.
British Chancellor Rachel Reeves’ budget proposal included the biggest tax hike in three decades, aimed at addressing gaps in public services seen as a “Conservative legacy”. The budget included raising £40 billion in taxes through increased employer contributions to National Insurance, raising alcohol and tobacco excise duties, and a significant increase in capital gains tax.
Reeves also allocated additional resources to vital sectors such as the National Health Service (NHS) and affordable housing.
while freezing fuel duty and investing in green hydrogen projects.
In another development, the UK Office for Business Responsibility raised its 2024 inflation forecast to 2.5%, from 2.2%, reducing market expectations of a possible interest rate cut by the Bank of England. The 2025 inflation forecast was also revised down significantly to 2.6%, from 1.5% previously.
Investors are now looking ahead to the Bank of England’s monetary policy meeting, scheduled for November 7.
where expectations are for a 25-basis point rate cut to 4.75%, according to a Reuters poll.
In terms of the GBP/USD movement, it is still seeking to break the 1.3000 level strongly, while the short-term trend remains uncertain.
as it trades below the 50-day exponential moving average around 1.3060. Meanwhile, the pair is trying to hold the minimum support levels at 1.2900 on the daily time frame.
with the 14-day Relative Strength Index (RSI) seeking to stay above 40.00.
which could pave the way for fresh bullish momentum.
GBP/EUR exchange rate update: Significant recovery after budget
The GBP/EUR exchange rate has stabilized in a narrow range this morning, following the release of the Eurozone’s preliminary CPI for October. The pound is currently trading at around €1.1954, little changed from its opening levels. This stability suggests that the British currency is recovering from the pressures it has faced recently.
EUR volatility despite positive inflation data
The Euro (EUR) is trading with significant volatility against most major currencies, following the release of the latest inflation data for the region. The preliminary reading for October showed headline inflation rising from 1.7% to 2%, beating expectations of 1.9%. At the same time, core inflation held steady at 2.7%, instead of the expected decline to 2.6%. These results reflect signs of stabilization within the Eurozone.
which helps to ease concerns about interest rate cuts by the European Central Bank.
The data suggests that the likelihood of a rate cut has receded, giving the single currency a slight boost. In cautious trading conditions, the euro appears to be regaining some of its safe-haven appeal for investors.
GBP/EUR Outlook
Looking ahead, the GBP/EUR exchange rate is expected to be influenced by the market’s appetite for risk.
especially in the absence of influential economic data. The only notable release will be the final UK Manufacturing PMI data for October. If it comes in line with initial expectations, it is likely to have a limited impact on prices.
Accordingly, the GBP/EUR exchange rate is expected to move in the context of risk dynamics.
with the potential for volatility based on trading sentiment. Optimism in the market could support the stability of the pound, while caution could undermine it.
