Ahead of the Fed’s rate decision, USD edged higher with markets fully pricing-in a cut and awaiting Powell’s guidance.
CAD rallied after the Bank of Canada delivered a hawkish rate cut – widely seen as concluding this cycle – and prompting GBPCAD to retreat from its nine-year peak.
GBP continued to slip to its weakest since August as investors brace for tax hikes and spending cuts in the UK budget.
AUD extended gains as hotter inflation dampened expectations of an RBA cut.
USD gained last night following a hawkish tone from Fed Powell who declared that a December rate cut is not a foregone conclusion. GBPUSD hit the May 2025 lows for the second time with markets clearly trying to defend this level.
The Fed cut rates by 25 bps and ended quantitive tightening.
*Daily move - against G10 rates as of 06:00 GMT, 30.10.25
** Indicative rates - interbank rates as of 06:00 GMT, 30.10.25
This morning the Bank of Japan left rates unchanged and gave no indication of when a rate hike might happen. JPY is weaker to start the day.
For today, markets focus on the eurozone. Eurozone Q3 GDP is expected at 1.2% YoY, with German CPI expected to ease to 2.2% YoY, keeping inflation above target but easing. The ECB is expected to hold rates at 2.00%.
While some of last night’s USD strength has moderated, the dollar remains broadly supported as markets anticipate limited appetite for further near-term rate cuts. As a result, a move toward the May 2025 GBPUSD high remains a distinct possibility.
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