Sterling gains on US dollar weakness amid US shutdown
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Daily Currency Update
The pound gained against the dollar on Wednesday as broad pressure weighed on the US currency following the government shutdown in Washington, which added to investor caution around US assets. The political gridlock risks delaying the release of key economic reports that feed into Federal Reserve policy decisions, undermining confidence in the dollar and lending support to GBP/USD.However, sterling’s upside remains limited by weak domestic fundamentals. Recent UK data showed the economy virtually flatlining in the second quarter, while the current account deficit widened more than expected to its largest level since the start of the year, factors that continue to cast doubt on the pound’s resilience in the medium term.
Key Movers
Key European release yesterday was the flash reading of Eurozone inflation for September, which came in as expected at 2.2%, up from 2.0% in August. The in-line print offered little surprise for markets and reinforced the ECB’s stance that current policy settings remain appropriate. As a result, the release had limited immediate impact on the euro, with traders seeing little shift in the monetary policy outlook and, by extension, limited impetus for EUR moves in the short term.Expected Ranges
- GBP/USD: 1.3455 - 1.3545 ▲
- GBP/EUR: 1.1425 - 1.1515 ▼
- GBP/AUD: 2.0325 - 2.0415 ▼
- EUR/USD: 1.1715 - 1.1795 ▲