USD weakens after recent highs
Daily Currency Update
Early in Thursday's session, we saw manufacturing and service PMI data from key economies like France, Germany, and the UK. European and German service sectors showed expansion, while manufacturing data exceeded expectations. In contrast, France's figures fell below forecasts for both sectors, as did the UK's; however, both remained above the 50.0 threshold, signaling continued expansion. In the US, job data showed a decrease in new unemployment claims, but continuing claims rose to their highest in nearly three years. Although average continuing claims are notable, they aren’t concerning. US manufacturing and services PMIs showed little change, both slightly exceeding expectations.In currency markets, GBP/USD has moved higher over the past 12 hours after touching a low of 1.2910, now nearing 1.3000. EUR/USD has also risen, climbing back above 1.0800. GBP/EUR has been fluctuating around the key level of 1.2000, opening this morning slightly lower at 1.1985.
Key Movers
Two major events are in focus for the coming weeks. The UK Autumn Budget will be released next Wednesday, shortly after midday. This will be Labour’s first budget in 14 years, presented by Chancellor Rachel Reeves, with anticipated tax increases and spending cuts totaling around £40 billion. Adjustments to National Insurance, income tax thresholds, and pensions are expected, and any deviation from these expectations could impact GBP movements.The following week, attention will turn to the outcome of the US elections. The US dollar has recently strengthened due to expectations of smaller rate cuts and growing bets on a potential victory for Donald Trump in the 2024 presidential election. Current polls and prediction markets show Trump leading over Democratic nominee Kamala Harris, with expectations that his policies may be inflationary, possibly keeping US interest rates higher for longer. While the UK budget is likely to impact GBP next week, the US election is expected to have broader implications for the currency market.
Expected Ranges
- GBP/USD: 1.2940 - 1.3010 ▼
- GBP/EUR: 1.1960 - 1.2040 ▼
- GBP/AUD: 1.9440 - 1.9660 ▲
- EUR/USD: 1.0780 - 1.0870 ▲