06/12/2024
Written by: Ian Morley
GBPEUR
Summary:
GBPEUR continues its upward momentum, reaching levels last seen in April 2022. This rise is underpinned by the ongoing weak EUR narrative, driven by concerns over European trade risks and economic stagnation. Meanwhile, the Bank of England’s (BoE) signals of a more gradual rate cut cycle have supported GBP’s relative strength.
Outlook:
Upcoming UK labour market data, including unemployment rates and wage growth, will play a pivotal role in shaping GBP’s trajectory. Stronger-than-expected job data could further boost GBP. However, the Eurozone remains under pressure from political uncertainties and the potential fallout from global trade policies, adding downside risk to EUR.
EURUSD
Summary:
EURUSD has slipped below critical June support levels, reflecting a stronger USD and persistent Euro weakness. The USD rally has been bolstered by expectations of reduced Fed rate cuts and stronger US economic resilience.
Outlook:
Key focus for this week includes US CPI data and speeches from Federal Reserve officials. Any upside surprises in inflation readings could reinforce USD strength. Meanwhile, Eurozone challenges, such as political instability in Germany, continue to weigh on EUR.
GBPUSD
Summary:
GBPUSD is trading near 1.2900, constrained by USD’s recovery and cautious market sentiment ahead of UK labour data. Recent BoE rate decisions and USD strength have contributed to the pair’s consolidation.
Outlook:
This week’s UK unemployment and wage data will be critical for GBP direction. Meanwhile, US inflation and retail sales figures will guide USD movements. A hotter-than-expected US CPI print could push GBPUSD lower.
AUDUSD
Summary:
AUDUSD showed mild recovery attempts, but concerns over China’s economic outlook and weaker-than-expected stimulus measures weigh heavily on the pair. Trump’s proposed trade tariffs add to the downside pressure.
Outlook:
The Australian Dollar faces headwinds from subdued demand in China, its largest trading partner. This week, US economic data and Chinese trade figures will likely dictate AUD’s direction.
Final Summary
The currency markets are navigating a complex landscape shaped by weak Euro sentiment, shifting central bank policies, and geopolitical developments. This week’s key events, including UK employment data, US inflation readings, and ongoing commentary from central bank officials, are expected to drive volatility across major currency pairs. Traders should remain alert to rapid shifts in sentiment as data unfolds.