GBP/USD Buoyed Ahead of US CPI Figures

GBP/USD gains momentum near 1.2770 as sterling remains strong against the USD, driven by market speculation over a potential Bank of England (BoE) interest rate decision on 19 December. However, BoE Governor Andrew Bailey's dovish outlook, suggesting four interest rate cuts in 2025, weighs on the pound. In contrast, the dollar strengthens on improved US Consumer Sentiment Index,ongoing geopolitical tensions, China's economic state, and concerns about Trump's impending trade tariffs. Despite the unemployment rate rising to 4.2% in November from 4.1%, higher-than-expected job growth and rising average hourly earnings could dampen expectations for a Federal Reserve rate cut at its upcoming policy meeting, sinking the USD. In the absence of critical UK economic indicators, today's BoE Deputy Governor David Ramsden's speech, speculation around the BoE's interest rate decision, and Wednesday's US Consumer Price Index (CPI) figures will determine the GBP/USD exchange rate.

USD/CAD Gains Ahead of BoC's Decisions

USD/CAD edges higher near 1.4150 as markets anticipate a larger interest rate cut by the Bank of Canada (BoC) at its December meeting weighing on the Canadian Dollar (CAD). Higher-than-anticipated labour market data signalled a rise in the unemployment rate to 6.8% from the previous 6.5%, exceeding the 6.6% estimate. The participation rate advanced to 65.1% from 64.8%, while Average Hourly Wages rose by 3.9% y-o-y. Rising concerns over trade tariffs and potential global trade threats limit the upside of the CAD. On the USD front, the Unemployment Rate increased to 4.2% in November from 4.1% in October. Meanwhile, Average Hourly Earnings rose by 0.4% month-on-month and 4% year-on-year, beating market estimates. In the upcoming sessions, bets on the BoC and Fed's interest rate decision, along with US Consumer Price Index (CPI) and Producer Price Index (PPI) reports this week, could influence the USD/CAD exchange rate.

EUR/USD Struggles Due to ECB Rate Cut Bets

EUR/USD lost momentum near 1.0560 as investors brace for a major interest rate cut from the European Central Bank (ECB) at Thursday's final policy meeting 2024. Friday's German Industrial Production dropped by 1.0% MoM from 2.0% in September, while yearly Industrial Production tumbled by 4.5% year-on-year (YoY) in October versus September's -4.3% revision. While the ECB will follow data-driven decisions, any dovish remarks during ECB President Lagarde's press conference could hinder the Euro's value. Meanwhile, the US dollar (USD) ticks higher on speculation that the Fed will introduce an interest rate cut in the upcoming week, as well as geopolitical tensions and anxieties about US President-elect Donald Trump's upcoming trade tariffs. While the upbeat employment figures muted the dollar, the better-than-expected US Consumer Sentiment Index showcased growth to 74 in December from 71.8, beating the expected 73. Apart from Thursday's European Central Bank (ECB) interest rate decision, this week's US consumer inflation figures will be key drivers for the EUR/USD exchange rates.

AUD/USD Gains Following China's CPI Inflation Figures

AUD/USD climbed to near 0.6444 following market sentiment around the Reserve Bank of Australia's (RBA) monetary policy decision and Chinese inflation figures. China's CPI rose by 0.2% YoY in November, down from 0.3% in October and missing the 0.5% market forecast. Monthly CPI inflation dropped by 0.6%, worse than the expected -0.4% and October's -0.3%. Meanwhile, the PPI fell 2.5% YoY in November, improving from October's -2.9% and exceeding the forecast of -2.8%, supporting the Aussie. Weaker-than-expected Australian Q3 Gross Domestic Product (GDP) growth fueled expectations surrounding Tuesday's interest rate decisions. On the Dollar front, better-than-anticipated US Consumer Sentiment Index figures strengthened the USD. The Index increased to 74 in December from 71.8, exceeding market expectations of 73, while the Unemployment Rate rose to 4.2% in November, compared to 4.1%. In the upcoming session, investors will closely monitor the US Consumer Price Index (CPI) data for November, the People's Bank of China, and the Reserve Bank of Australia's (RBA) monetary policy decision to determine the AUD/USD exchange rate.

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