Daily Currency Update
GBP/USD has dropped further this morning with prolonged dollar strength continuing to be seen in financial markets. GBP/USD slipped below 1.21 overnight for the first time since March 2023 as investors continue to worry about US interest rates needing to be held at current levels well into 2024. The latest monthly survey from the British Retail Consortium has added some extra downward pressure to the pounds value with it showing the first monthly drop in supermarket prices in over two years. With food bills making up a large chunk of consumer spending, this will add weight to the argument that the Bank of England will no longer need to raise interest rates and will (like the US Federal Reserve) hold them at current levels into 2024. GBP/USD is currently around 1.2070. GBP/EUR is a touch lower at 1.1525.
Key Movers
EUR/USD has hit its lowest level since December 2022 as investors continue to seek the safe haven US dollar. Despite Friday's slightly under-par Personal Consumption Expenditure reading and the US House of Representatives/Senate agreeing to an extension of government spending thereby avoiding a federal shutdown of non-essential services the dollar's advance continues unabated. With the Eurozone economy flatlining at best and Germany's powerful manufacturing sector in the doldrums the contrast compared to a relatively buoyant US economy is seeing traders shun the euro as we head into Autumn. Most analysts predict that both the US Fed and the European Central Bank are now in pause mode regarding rate hikes therefore another driver of EUR/USD is expectations on when each bank will decide to start cutting rates. At present, the ECB is the favorite to blink first. On the data front, yesterday saw a better-than-expected ISM Manufacturing PMI from the States with 49.0 beating expectations of 47.8. Today we have US JOLTS Job Opening data at 3 p.m. EUR/USD is at 1.0485 up from its year-to-date low of 1.0459 seen during today's Asian session.
Expected Ranges
- GBP/USD: 1.2000 - 1.2140 ▼
- GBP/EUR: 1.1465 - 1.1590 ▼
- GBP/AUD: 1.9020 - 1.9200 ▲
- EUR/USD: 1.0400 - 1.0530 ▼