Daily currency update
The US Dollar held near a three-week high against major currencies on Monday as markets anticipated a Federal Reserve rate cut this week, accompanied by signals of a cautious easing trajectory for 2025. The prospect of slower rate reductions supported the greenback, curbing risk appetite and pressuring high-beta currencies like the AUD and emerging market FX, while exerting downward pressure on pairs such as EUR/USD and GBP/USD.
Despite expectations of policy adjustments, the Fed’s focus on inflation—which remains above its 2% target—has tempered aggressive rate-cut speculation. Policymakers have reiterated that recent inflation increases reflect a “bumpy” path toward price stability rather than a reversal of the broader disinflationary trend.
Key movers
The Bank of England (BoE) is expected to keep its Bank Rate unchanged at 4.75% during Thursday’s meeting, as persistent wage pressures and the fiscal policies of the new government limit the scope for further tightening. Upcoming UK data releases—including PMIs, jobs reports, CPI, PPI, and retail sales—are likely to influence market sentiment and the trajectory of the pound.
While steady rates may provide near-term stability, a lack of hawkish guidance could weigh on GBP against major currencies, especially if inflation data shows signs of cooling. Investors will be closely monitoring whether wage growth sustains its current levels, as this remains a key driver of the policy outlook and GBP volatility.
Expected ranges
GBP/USD: 1.2585 – 1.2665 ↓
GBP/EUR: 1.1985 – 1.2055 ↓
EUR/USD: 1.0465 – 1.0535 ↓
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