USD shows modest gains following Fed minutes
Daily Currency Update
The US dollar experienced a slight increase yesterday as investors revaluated their predictions for the extent of interest rate cuts by the Federal Reserve for 2024. Caution prevailed in the markets following an impressive risk rally the previous month.The released minutes of the Federal Reserve's December policy meeting, made public yesterday evening, indicating officials were confident in managing inflation and expressed concerns about the potential adverse effects of the central bank's restrictive monetary policy on the economy.
Despite this, there were no definitive indications of when the Fed might initiate rate cuts, as policymakers still recognised the necessity for maintaining restrictive rates for the foreseeable future.
Key Movers
The focal point in the UK today will be the release of the UK Services PMI. The services sector, a key driver of the country's economic growth, faced challenges in the latter part of the previous year, experiencing three consecutive declines. However, in November, the PMI rebounded, reaching 50.9 and returning to expansion territory. The anticipated consensus for December is 52.7, signalling a potential modest growth.In contrast, manufacturing production has witnessed a decline for ten consecutive months. The downturn in December was influenced by reduced demand for UK goods internationally and a decrease in manufacturers' optimism regarding business conditions. The persistently weak UK economy and elevated borrowing costs continue to exert a dampening effect on manufacturing activity.
Expected Ranges
- GBP/USD: 1.2685 - 1.2755 ▲
- GBP/EUR: 1.1575 - 1.1645 ▲
- EUR/USD: 1.0935 - 1.0995 ▲