ECB interest rate cut expected in December
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Daily Currency Update
Friday saw limited macroeconomic data. Flash European CPI year-on-year figures indicated that inflation rose but remains on track to return to the ECB’s inflation target by the first part of 2025. This news reinforces expectations that the ECB will continue cutting policy rates toward a neutral stance.Bank of England Governor Andrew Bailey held a press conference in London on Friday regarding the financial stability report, but it did not yield any notable sound bites.
GBP/USD reached a weekly high of 1.2740 on Friday but has since dipped below 1.2700 as of this morning. GBP/EUR pushed higher on Friday, trading above 1.2000, and is now trading just below 1.2100. Meanwhile, EUR/USD briefly tested a drop below 1.0500 but opens today slightly above that level.
Key Movers
At the start of this week, data remains sparse, with US manufacturing data (ISM Manufacturing PMI) expected this afternoon and jobs data (JOLTS Job Openings) due tomorrow. As a result, currency markets are likely to take direction from developments elsewhere, including updates from the French political landscape, statements from incoming US President Trump, or ongoing tensions between Ukraine and Russia, as well as Israel and Palestine.Markets will also closely watch for any signals from central banks regarding further rate cuts before year-end. The European Central Bank is expected to announce a 25 basis point cut next week, though there is less certainty about what the Bank of England or Federal Reserve will decide the following week.
Expected Ranges
- GBP/USD: 1.2670 - 1.2740 ▲
- GBP/EUR: 1.2040 - 1.2110 ▲
- GBP/AUD: 1.9480 - 1.9630 ▲
- EUR/USD: 1.0490 - 1.0620 ▲