Daily Analysis: GBP/USD Hits 14-Month Lows Amid Severe Economic Uncertainty

Our daily analysis of EUR, GBP and USD.

DAILY ANALYSIS

GBP

• Sterling remained subdued yesterday due to limited data, with the BoE’s Breeden speaking both today and on Wednesday, an event to which investors will be searching for signals before Friday’s Key interest rate decision, where speculation surrounding the release predicts that rates are expected to hold at 4% in an attempt to bring inflation down to the 2% target.
• Political noise continues to linger for the Pound, as Reeves addresses the nation this morning and Starmer fuels tax-rise speculations ahead of Novembers budget, adding deeper uncertainty to the UK’s economic outlook.
• GBP/USD trades around 1.3100 at the open this morning, a 14-month low for the pair amid growing investor caution.

USD

• We saw the ISM Manufacturing PMI dip to 48.7 vs 49.5 expected yesterday, adding negative pressure on the Greenback as Fed officials offered analysts with a neutral tone. Moreover, the Feds Lisa Cook stated that a December Rate Cut isn’t guaranteed, leaving traders uncertain about the Feds next move after a weaker-than-expected data release.
• It is a relatively quiet day for the Dollar today, causing our focus to shift onto the Feds Bowman, whose remarks could offer near-term guidance ahead of Wednesday’s ADP Employment and ISM Services PMI, both of which will shape market sentiment ahead of Fridays Nonfarm Payrolls.
• EUR/USD trades around 1.1525 at the open this morning.

EUR

• It was a quiet stretch for the Eurozone yesterday, with the Euro trading mostly on speculation as ECB officials maintained a neutral tone, offering investors little insight.
• Markets now turn their attention to the ECBs President Lagarde who speaks twice this morning, looking for future policy hints within the ECB, while Retail Sales on Thursday could set-off short-term volatility for the Eurozone if the figure does not meet the 1% forecasted.
• GBP/EUR trades above 1.1375 at the open this morning.

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