With one central bank cutting last week, traders await the decision of another this week. There are no major swings to speak of but rather sterling and dollar holding steady amidst economic uncertainty on both sides of the Atlantic. Fiscal risks, particularly ahead of the UK budget decision, have helped the euro to edge higher. Read on for more info and our team offer some key insights too.
Current rates
| Currency pair | Rate |
|---|---|
| eur usd | 1.1515 |
| gbp eur | 1.1403 |
| gbp usd | 1.3131 |
Rates correct as of 10:50am on Monday 3 November but may now have changed.
The Big 3
Three stories covering the latest developments in economies, currencies and borders.
Dollar holds firm as markets digest Fed’s cautious cut
The dollar remains near a three-month high after the Federal Reserve cut rates by 25bps last week, signalling a more cautious outlook. Chair Jerome Powell noted the Fed is nearing a “neutral” stance, with opinions split over further easing (this is the second cut of the year) amid the ongoing US government shutdown and patchy data flow. The move reflects growing concern over labour market weakness, but policymakers remain wary of fuelling inflation.
[Reuters]
Sterling steady ahead of finely balanced BoE call
All eyes are on the Bank of England this week as markets price in a close call on interest rates. UK gilts have rallied on easing inflation and weak growth data, but there is a general sense that rates will remain as they are even with some pointing to a 28% chance a cut to 3.75%. While inflation remains almost double target, Governor Bailey has voiced concern over an economy “running under potential.” The budget coming later this month could put further pressure on growth, making this decision one of the BoE’s tightest in years.
Euro edges higher amid UK fiscal jitters and ECB calm
UK fiscal risks weighing on the pound have helped the euro to inch higher against sterling. Political pressures on Chancellor Reeves and fears of slower growth have driven the move, while the ECB also holds steady, signalling it’s “in a good place” on policy. With French political uncertainty and mixed eurozone data, near-term upside for the euro looks limited, though a softer dollar could lend support.
[FXStreet]
Looking forward
- Monday: US ISM Manufacturing PMI. Indonesia and Pakistan CPI.
- Tuesday: US off-year elections. JOLTs Job Openings. Reserve Bank of Australia interest rate decision.
- Wednesday: US ISM Services PMI.
- Thursday: AUD Balance of Trade. BoE interest rate decision.
- Friday: Canada reports unemployment. US unemployment data. Mexico CPI. CNY balance of trade
Here’s what we’re talking to our clients about
We’re always here to support. Here are some of the conversations we’re having:
- Risk appetite ahead of UK interest rate decision.
- US non-Farm Payroll release on Friday.
- ECB’s President Christine Lagarde due to speak on Tuesday.
The contents of this article do not constitute financial advice and are provided for general information purposes only. While the content is based on information believed to be accurate at the time of publication, no guarantee is provided.