Christmas doves: Expectations hit GBP and USD

Market reports
Thanim Islam
  • GBP and USD set to weaken on dovish rate expectations
  • US final numbers in focus

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Well, it seems that all the action in the FX markets happened in the morning following that lower-than-expected UK inflation number. GBP losses were limited after the initial drop off in what appears to be very thin trading activity heading into the Christmas break.


Market rates

* Daily move - against G10 rates at 7:30am, 21.12.23

** Indicative rates - interbank rates at 7:30am, 21.12.23


Data points



  • None today.

Our thoughts

Just the final third quarter readings on the GDP print from the US and core PCE inflation numbers. Unless we see a higher core PCE and/or higher GDP number then expect the market to prefer to continue to weaken USD on the dovish rate cut expectations. GBP weakness is likely to continue as well in light of the dovish interest rate pricing.

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