Weekly Market Overview: GBP, EUR, and USD Analysis
GBP: Pound’s Pressure Eases Amid Positive GDP Figures
The pound faced ongoing pressure throughout the past week. However, a glimmer of hope emerged on Friday with better-than-expected Gross Domestic Product (GDP) figures that helped stabilize sterling’s performance.
Today, the market will closely watch as Monetary Policy Committee (MPC) member Mann speaks. Known for her hawkish stance on interest rates, her comments could potentially advocate for additional rate hikes, which might boost the pound.
On Wednesday, the final reading of the Services Purchasing Managers’ Index (PMI) is set to be released, offering insights into the economic landscape. Will this data bring some positive news for the UK economy?
For GBPUSD traders, all eyes will be on Friday’s release of Non-Farm Payrolls (NFP) data, expected to impact the currency pair’s direction substantially.
EUR: Eurozone Inflation Declines as Lagarde Addresses the ECB
Recent data revealed that Eurozone inflation dropped to its lowest level in two years, with core inflation standing at 4.5%. European Central Bank (ECB) President Lagarde is scheduled to speak on Wednesday, raising questions about whether she will confirm the end of the rate-hiking cycle, considering the declining inflation figures.
The outcome of Lagarde’s speech will likely influence EURUSD, as markets assess whether the excellent inflation news might strengthen the euro or if the interest rate outlook will exert downward pressure.
USD: Fed’s Rate Hike Cycle in Question as Government Shutdown Looms
In the United States, Core Personal Consumption Expenditure data was released last week, showing only a modest 0.1% increase. As this metric is the Federal Reserve’s favoured inflation gauge, the question arises: does this signal the conclusion of the Fed’s rate hike cycle?
New York Fed President Williams added to the dovish sentiment by suggesting that the Fed might be nearing the peak of its target range for the federal funds rate. Furthermore, the U.S. Congress narrowly averted a government shutdown by agreeing to a temporary deal extending funding until mid-November, raising uncertainty about the government’s fiscal stability.
Looking ahead, the week’s primary data release is the eagerly anticipated Non-Farm Payrolls report scheduled for Friday. It will provide crucial insights into the health of the U.S. economy, with expectations of adding 168,000 new jobs in September. The outcome of this report will likely have significant implications for the strength of the U.S. dollar.