US Dollar Rallies on Upbeat Payrolls Report, Pound Undermined by Lacklustre Data

GBP/EUR Exchange Rate: Pound Falters on Disappointing Data

The Pound Euro exchange rate retreated over the past week as Sterling sentiment was undermined by underwhelming UK data.

A sharper-than-expected cooling of UK wage growth in October saw the GBP/EUR exchange rate stumble in the first half of this week as it weakened Bank of England (BoE) interest rate expectations, despite unemployment unexpectedly holding.

The publication of the UK’s latest GDP figures then saw GBP/EUR slide to a one-week low, after the UK economy unexpectedly contracted at the start of the third quarter.

The main catalyst of movement in the Pound through the coming week will undoubtedly be the forward guidance following the BoE’s latest policy meeting, with Sterling potentially strengthening if the bank strikes a hawkish chord.

GBP/USD Exchange Rate: Sterling Fluctuates amid Mixed Market Mood

The Pound US Dollar exchange rate traded erratically over the past week, amid a fluctuating market mood.

In the absence of any notable economic data in the second half of last week, the increasingly risk-sensitive Pound was mostly driven by market sentiment. This led Sterling to falter as a bearish tone prevailed.

An uneven market mood, coupled with the UK’s lacklustre economic data, has seen this volatility persist so far this week.

Looking past the BoE’s interest rate decision, the GBP/USD exchange rate may also be influenced by the publication of the UK’s latest PMI figures. Could another expansion in the vital service sector help to lift Sterling?

USD/GBP Exchange Rate: US Dollar Rallies on Upbeat Payroll Data

The US Dollar Pound exchange rate was supported by some high-impact US data releases over the past week.

The latter half of last week saw the ‘Greenback’ rally on the back of the latest US payroll figures. A larger-than-expected increase in the number of jobs added in November, alongside a fall in unemployment, saw bets on a March interest rate cut from the Federal Reserve fall dramatically.

Reinforcing the upside in the US Dollar in the first half of this week was the latest US consumer price index. Signs of sticky US inflation last month further undermined Fed rate cut speculation, ahead of the bank’s rate decision on Wednesday evening.

The Fed is expected to leave interest rates on hold this month but could trigger significant volatility as it outlines its policy plans for 2024. If the bank pushes back against speculation it will begin cutting interest rates as early as March, the ‘Greenback’ is likely to surge.

EUR/USD Exchange Rate: Euro Wavers on Mixed Data

The Euro US Dollar exchange rate traded in a wide range over the past week in response to some mixed German economic data.

EUR sentiment was initially sapped by some weaker-than-expected German industrial data, with further pressure stemming from Germany’s finalised CPI figures for November as they confirmed a sharp slowdown in inflation.

The first half of this week then saw the Euro mount a recovery on the back of Germany’s latest economic sentiment index as morale in the Eurozone’s largest economy rose to its highest levels since March.

Looking ahead, the Euro could face significant pressure later this week as the European Central Bank (ECB) delivers its latest interest rate decision.

While no changes to monetary policy are expected this month, it’s thought the ECB is now firmly exploring the idea of multiple rate cuts in 2024. If this is confirmed by the bank, EUR exchange rates are likely to plummet.

Matthew Andrews

Contact Matthew Andrews

Do Not Sell My Personal Information