Market Insight 29-10-2024

  • Home
  • Market Insight 29-10-2024

GBP/EUR

Summary:
The Pound has held steady against the Euro as both currencies await significant policy and economic updates. The UK Chancellor’s upcoming Autumn Forecast Statement is driving speculation about increased public spending and possible tax increases, a shift anticipated to impact the UK’s growth outlook. Meanwhile, the Euro remains sensitive to German and Eurozone GDP and inflation data, which are expected to reflect continued low growth and inflation pressures.

Outlook:
For the GBP/EUR, the UK budget announcement will be a primary driver this week, as any substantial fiscal adjustments could influence the Bank of England’s interest rate policy. On the Euro side, weak German GDP data and lower-than-target inflation could add to expectations of a European Central Bank rate cut in December, potentially placing downward pressure on the Euro.

GBP/USD

Summary:
Sterling has traded cautiously against the US Dollar, hovering below the psychological 1.3000 level. This trend aligns with the Dollar’s resilience as investors await the UK Autumn Budget and a range of major US data releases, including Q3 GDP, Nonfarm Payrolls, and the PCE Price Index. Speculation about slower job growth in the US is contributing to heightened expectations of a possible Fed rate cut by year’s end.

Outlook:
GBP/USD could experience heightened volatility as US data rolls out, potentially affecting the Federal Reserve’s rate trajectory and, by extension, the Dollar’s strength. Additionally, the UK’s fiscal stance will be critical, as any major announcements could impact the Bank of England’s near-term policy direction. If the US data shows economic cooling, the Pound may gain ground if expectations for Fed rate cuts strengthen.

EUR/USD

Summary:
The Euro has seen limited movement against the Dollar, stabilising above 1.0800 as both currencies await key economic indicators. Concerns over a potential ECB rate cut in December have tempered the Euro’s performance, while investors are focused on upcoming US data releases and their implications for the Fed’s policy.

Outlook:
EUR/USD is likely to remain range-bound in the near term, with fluctuations expected based on the outcomes of Eurozone inflation data and US economic releases. If the data supports a December rate cut by the Fed, the Dollar could weaken, giving the Euro room to recover. Conversely, stronger US indicators could add strength to the Dollar and keep the EUR/USD under pressure.

AUD/USD

Summary:
The Australian Dollar has experienced pressure, dropping to its lowest level since August as expectations for Australian inflation fall and US Dollar strength persists. The AUD/USD is impacted by concerns that the Reserve Bank of Australia may consider an interest rate cut, as well as recent support for the US Dollar driven by strong economic data and elevated US bond yields.

Outlook:
AUD/USD is likely to remain weak ahead of Australia’s CPI release, as further confirmation of low inflation could strengthen the case for a rate cut. However, any decline in US job numbers or signs of cooling inflation could weaken the Dollar, potentially offering a short-term reprieve for the Australian Dollar.

Final Summary

This week promises significant currency market movement, with the US Dollar’s trajectory hinging on a data-heavy calendar, the UK’s Autumn Budget, and potential shifts in ECB policy outlook. Each of these could set the tone for central bank actions through the year-end, especially regarding anticipated rate cuts. In the near term, Sterling and the Euro face modest downside risks, while the Australian Dollar remains sensitive to both domestic inflation data and developments in the US economic outlook.