GBP reaching new high against EUR
Daily Currency Update
The pound reached a new high against the euro, with markets favouring potential rate cuts by the European Central Bank (ECB) while maintaining stability in response to the Bank of England's (BoE) policy trajectory.The pound saw a modest uptick against the dollar, following its most substantial monthly gain in a year. This surge was attributed to increased pressure on the U.S. currency amid rising speculations that the Federal Reserve might implement rate cuts sooner than several other central banks.
Key Movers
Anticipations regarding US interest rates have swiftly shifted from anticipating more increases to contemplating a series of cuts potentially commencing in March. This shift poses potential disastrous outcomes for the prevailing belief in sustained high rates and the associated investments in the US dollarA substantial amount of capital is currently committed to the US dollar, driven by the expectation of its ascent against all major currencies except the euro. Due to unforeseen developments, the rapid decline of the dollar is intensifying, and within the rarefied atmosphere of December, this already swift descent may gain momentum. This could lead to a disorderly adjustment of investments, resulting in a surprisingly significant drop.
Expected Ranges
- GBP/USD: 1.2615 - 1.2685 ▲
- GBP/EUR: 1.1585 - 1.1645 ▲
- EUR/USD: 1.0875 - 1.0945 ▲