06/12/2024
Written by: Ian Morley
GBPEUR
Summary
GBP struggled yesterday, extending losses from Friday as markets anticipate Wednesday’s UK CPI data. Meanwhile, the EUR received support following hawkish comments from ECB member Joachim Nagel, who suggested potential inflationary risks from trade wars, prompting speculation about future rate hikes.
Outlook
Today, the Eurozone’s final CPI figures for October will be a focal point, with markets seeking confirmation of inflationary pressures. For GBP, attention shifts to tomorrow’s CPI data, with potential implications for the Bank of England’s December rate decision. Any GBP rally on positive CPI data could present a hedging opportunity, particularly for businesses with EUR exposure.
GBPUSD
Summary
GBPUSD held steady after Monday’s recovery, trading near 1.2680 following a six-month low last week. USD saw some consolidation, easing from its recent highs, as traders adjusted expectations for the Federal Reserve’s December rate decision.
Outlook
GBP remains in a holding pattern as markets await clarity from the Bank of England’s Monetary Policy Hearings and tomorrow’s inflation data. A positive CPI surprise could bolster GBP, but the longer-term outlook remains USD-positive due to strong US economic fundamentals and expectations of fewer Fed rate cuts.
EURUSD
Summary
EURUSD moved higher on Monday, driven by hawkish ECB commentary and USD consolidation. The pair is now trading near 1.0600 as markets await Eurozone inflation revisions and mid-tier US data releases.
Outlook
The EUR could gain further if today’s CPI figures suggest persistent inflation, tempering expectations of an aggressive ECB rate cut in December. However, the USD remains supported by strong retail sales and a robust economic outlook, limiting the pair’s upside potential.
AUDUSD
Summary
AUDUSD faced resistance near 0.6500, halting a two-day recovery. The Reserve Bank of Australia reaffirmed a cautious stance, suggesting the need for sustained inflation data improvements before considering rate cuts.
Outlook
The AUD remains vulnerable, with a bearish bias prevailing in the short term. Immediate support lies near 0.6400, while resistance at 0.6500 could limit any upward moves. Market sentiment and risk appetite will likely dictate the pair’s direction this week.
Final Summary
The currency markets are navigating key inflation data and central bank communications this week. GBP and EUR traders should monitor inflation prints closely, while USD remains supported by its economic resilience.