06/12/2024
Written by: Ian Morley
GBPEUR
Summary:
The EUR is under pressure due to expectations of further European Central Bank (ECB) rate cuts. Meanwhile, the Bank of England (BoE) maintained a relatively hawkish tone, emphasising a cautious approach to easing monetary policy. This has provided some support to the Pound, but the cross remains below key technical levels.
Outlook:
The EUR is likely to face continued pressure from the ECB’s dovish stance and potential future rate reductions. However, the BoE’s cautious approach to rate cuts may cap any significant upside for the GBP. Traders will watch for Tuesday’s UK employment data and any further ECB commentary for directional cues.
GBPUSD
Summary:
GBPUSD faced resistance near the psychological 1.3000 mark after a brief recovery. The pair weakened as the US Dollar regained some ground, supported by expectations of continued policy easing by the Federal Reserve (Fed). The BoE’s signals of gradual rate cuts contrasted with the Fed’s data-dependent outlook.
Outlook:
GBPUSD remains at risk of further downside, with technical indicators favouring the bears. The pair could test support near 1.2900 and potentially head towards the 1.2800 region if broader USD strength persists. Any sustained move above 1.3000 would be required to shift the short-term bias back to bullish.
EURUSD
Summary:
EURUSD struggled to hold above 1.0800 as the Euro faced selling pressure amid expectations of faster ECB rate cuts. The US Dollar benefited from renewed demand following the Fed’s recent rate cut and optimistic economic outlook under Trump’s administration.
Outlook:
EURUSD may continue to trade with a bearish bias, with a potential move towards support near 1.0700. Upside momentum could be capped near 1.0900 unless there are significant dovish surprises from the Fed. Economic data, including US consumer sentiment, will likely influence the pair in the near term.
AUDUSD
Summary:
AUDUSD retreated from a two-week high near 0.6700 as the US Dollar regained strength. Despite a hawkish Reserve Bank of Australia (RBA), the pair remains under pressure, with China’s fiscal measures failing to provide sustained support to the Aussie.
Outlook:
Further losses appear likely unless the pair reclaims the 0.6700 level, with downside targets around 0.6600 and 0.6550. A breakout above 0.6700 could shift the bias back to bullish, targeting the 0.6800 level.
Final Summary
This week, currency markets remained volatile, influenced by central bank decisions and shifting economic forecasts. The Pound showed resilience against the Euro but struggled against the Dollar, while the Euro and Australian Dollar faced continued downside pressures. Looking ahead, market participants will focus on upcoming economic data and central bank commentary for clearer direction.