Daily Currency Update

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Dollar falls as Fed cuts rates

GBP - British Pound

Sterling has had another good 24 hours with GBP/USD pushing back up through the 1.29 handle as investors continue to take heart from the decision by MPs to vote for a December 12th general election. It seems this is the best way of breaking the Brexit deadlock. With bookmakers predicting a Tory majority government, hopes are that should this play out Boris Johnson's withdrawal agreement will get voted through and the impasse of the past couple of years will finally be put to bed.

Official manifestos are yet to be published however the main parties stances on Brexit will likely be at the forefront of voters minds. Conservatives will be looking to push through Boris' Brexit withdrawal plan; Labour will be looking to renegotiate with the EU and then put the vote to the public; new deal or no Brexit. The Lib Dems and SNP will be campaigning to cancel Brexit altogether by revoking Article 50.

Polls between now and December will be scrutinised and likely to push the pound one way or the other. However the current Tory lead appears to be adding support to sterling.

GBP/USD is heading towards 1.2950 with GBP/EUR a shade under 1.16.

Key Movers

It was all eyes on the US Fed yesterday as The Federal Open Market Committee cut its main financing rate from 2% to 1.75% as widely predicted. The main talking point was that Fed Chairman, Jay Powell indicated that policy was now appropriate given economic conditions so the chances of another move lower before Christmas have dropped to around 25%. Although a reduction in chances of another cut should have strengthened the dollar, it appears the better than expected GDP figure from the States (1.9% vs exp 1.6%), a Brexit extension being agreed, and confirmation of ongoing dialogue between China and the US re: trade saw its initial move higher being reversed by better risk appetite. EUR/USD is pushing up towards 1.12 again with USD/JPY slipping back to 108.60. All eyes will now turn to the US Jobs report tomorrow with the headline Non-Farm Payroll expected to slip to 90k for October. A slight uptick in unemployment to 3.6% from 3.5% is also pencilled in.

The commodity currencies have gained on the back of the dollar sell-off with AUD/USD pushing up to .6930 buoyed by a much better than expected Building Approvals figure showing 7.6% growth for Sept - Oct. ANZ Business Confidence also picked up, albeit from a very low base rising from -53.5 to -42.4. NZD/USD has pushed up above .64 as a result of this and the previously mentioned greenback weakness.

There is little happening on the data front from the Eurozone this week. Today is a significant day as we wave goodbye to Mario Draghi as head of the European Central Bank. Draghi was credited with saving the Eurozone from implosion in the midst of the debt crisis earlier this decade with his now famous "anything it takes" speech which signalled the start of the ECBs Quantitative Easing program. Former head of the IMF, Christine Lagarde takes office tomorrow with her first interest rate decision/press conference due December 12th, the same day UK voters head to the polls!

Expected Ranges

GBP/USD: 1.2875 - 1.3010 ▲

GBP/EUR: 1.1540 - 1.1630 ▲

GBP/AUD: 1.8660 - 1.88 ▲

GBP/NZD: 2.01 - 2.0270 ▲

GBP/CAD: 1.6975 - 1.7090 ▲