We have witnessed some notable swings in the currency market over the past couple of weeks amid a shifting of central bank interest rate expectations.
During this time, we’ve seen GBP/EUR climb as high as €1.20 before settling at €1.19, while EUR/GBP held at £0.83.
Meanwhile, GBP/USD slumped from $1.33 to $1.31, while EUR/USD slid from $1.11 to $1.10.
Latest currency news
Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…
What’s been happening?
The US dollar traded in a wide range over the past couple of weeks. After initially being pressured by risk-on flows and growing bets for another bumper Federal Reserve interest rate cut, the US dollar mounted a convincing recovery as an impressive US payroll print erased bets for another 50bps Fed rate cut in November.
In contrast, after soaring to new multi-month highs through the end of September, the pound the tumbled at the start of October after Bank of England (BoE) Governor Andrew Bailey suggested the bank may become ‘more aggressive’ in cutting interest rates if inflation remains under control.
Meanwhile, the euro faced a major setback with the release of abysmal Eurozone PMI data, which underpinned bets for another interest rate cut from the European Central Bank (ECB)
What do you need to look out for?
Looking ahead, the immediate focus will be the latest US consumer price index. If September’s CPI figures report that inflation continues to cool at a faster-than-expected pace, it may revive bets for another 50bps Fed rate cut and reverse the US dollar’s recent recovery.
The UK’s own inflation figures will also be a key focus for GBP investors, particularly in the wake of recent comments from the BoE Governor. If inflation remains above 2%, it may temper rate cut bets and lift the pound.
For EUR investors, the spotlight will be on the ECB’s latest interest rate decision, with the euro poised to slide if the bank cuts rates again this month.
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