August's higher than expected CPI numbers saw markets now in favour of a 0.25% rate cut by the Fed next week. As a result USD continued to trade stronger, taking both GBPUSD and EURUSD to a 3-week low.
Expecting a smaller rate cut next week equity markets experienced a wave of sell-offs, which took GBP down with it as well.
GBPEUR now trades at a 2-week low.
*Daily move - against G10 rates at 7:30am, 12.09.24
** Indicative rates - interbank rates at 7:30am, 12.09.24
Today, markets are widely expecting another 0.25% interest rate cut by the European Central Bank (ECB) along with data-dependent guidance on future rate cuts – essentially reaffirming the forward guidance from what has been previously stated.
Barring any major surprises, we expect minimal impact on EUR. It is also worth noting that we have US PPI numbers and weekly jobless claims – further USD gains could be seen on a higher PPI number as well as a lower claims number.
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