Weak German Data Fuels Expectations of Further ECB Rate Cuts
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Daily Currency Update
Economic data released today underscored the challenges Europe is facing, heightening expectations of additional rate cuts from the European Central Bank (ECB) and the Bank of England.Germany, the eurozone's largest economy, underperformed in the third quarter of 2024. GDP grew by just 0.1% quarter-on-quarter, revised down from an initial estimate of 0.2%. On an annual basis, the economy contracted by 0.3%, worse than the preliminary figure of a 0.2% decline.
While other eurozone countries are faring better, Germany accounts for over 30% of the bloc's GDP, making its struggles a significant drag on the region's overall performance.
The ECB, which last reduced rates in October, is widely expected to cut rates further at its December meeting to support the weakening economy.
Key Movers
The US dollar hovered near a 13-month high on Friday as markets evaluated the Federal Reserve's potential interest rate trajectory, while ongoing uncertainty in Europe kept pressure on the euro.Overnight data revealed a surprising drop in U.S. weekly jobless claims to a seven-month low, though longer unemployment durations signalled lingering labour market slack. This mixed picture could give the Fed some flexibility to consider another rate cut in December.
Expected Ranges
- GBP/USD: 1.2455 - 1.2545 ▼
- GBP/EUR: 1.2015 - 1.2095 ▲
- GBP/AUD: 1.9275 - 1.9365 ▼
- EUR/USD: 1.0325 - 1.0415 ▼