GBP/USD Firms on Weaker USD

GBP/USD recovered near 1.2700 as the USD plunged following disappointing US economic data. The US ISM Services PMI declined to 52.1 in November, down from 56.0 in October, falling short of the expected 55.5. The US S&P Global Composite PMI eased to 54.9 in November from 55.3 previously, while the Services PMI slipped to 56.1 from 57.0. However, speculation that US President Donald Trump's tariff plans and expansionary policies will stimulate inflation, coupled with Fed Chair Jerome Powell's hints that the Fed will adopt a cautious stance on cutting rates, boosted the USD. Additionally, ongoing geopolitical risks stemming from the Russia-Ukraine conflict and global trade war fears continue to evoke safe-haven demand, driving rising demand for the USD. On the pound front, Bank of England (BoE) Governor Andrew Bailey's prediction of 'four interest-rate cuts in 2025' caps the currency's upside potential. The S&P Global UK Services PMI was revised to 50.8 in November 2024, down from 52 in October. In today's session, the UK's Construction PMI and US initial jobless claims will be key drivers for the GBP/USD exchange rate.

AUD/USD Holds Steady Amid RBA Rate Cut Bets

AUD/USD held steady near 0.6441, as slower-than-expected GDP growth and elevated expectations of the RBA's dovish stance lowered the Australian Dollar (AUD). Australia's trade surplus rose to 5,953M MoM in October, up from a revised 4,532M in September, surpassing the forecast of 4,500M. The country's GDP expanded by 0.3% QoQ in Q3, slightly above Q2's 0.2% growth but below the 0.4% market expectation. Meanwhile, the final reading of Australia's Judo Bank Services PMI increased to 50.5 in November from 49.6 in October, outperforming the forecast of 49.6. While upbeat trade data strengthened the Aussie, growing concerns about potential import tariffs from President Donald Trump could weigh on the AUD. On the greenback front, November's ISM Services PMI indicated a steeper-than-anticipated slowdown in the service sector, and ADP employment figures fell short of expectations. In the absence of any market-moving Australian data for the rest of the week, the broader market sentiment surrounding the US labour market will guide the AUD/USD pair.

EUR/GBP Subdued by French Political Turmoil

EUR/GBP trades lower near 0.8300 as the euro remains highly volatile following the French no-confidence vote, which is expected to lead to the collapse of Prime Minister Michel Barnier's government. Trump's tariff threats, German Factory Order figures, growing expectations of more interest rate cuts from the European Central Bank (ECB), and dovish remarks from ECB policymaker Olli Rehn hinting at further policy easing are weighing on the euro (EUR). However, the sterling remains strong against most of its peers, despite Bank of England (BoE) Governor Andrew Bailey's prediction of four interest rate cuts in 2025. He emphasised that the central bank still has work to do to reduce inflation to below its 2% target. The latest retail sales report from the Eurozone and US unemployment claims will influence the EUR/GBP exchange rate in today's session.

EUR/USD Struggles Ahead of US Initial Jobless Claims

EUR/USD holds ground around 1.0528 as USD weakness continues due to softer-than-expected ISM PMI figures. US ISM Services PMI declined to 52.1 in November from 56.0 in October, below the expected 55.5. The US S&P Global Composite PMI fell to 54.9 in November from 55.3, while the Services PMI plunged to 56.1 from 57.0. Hawkish remarks from several FOMC members, including Fed Chair Jerome Powell, continue to support the USD. On the Euro front, the euro gains on firm German Factory Orders and upbeat sales figures. Germany's Industrial Orders rose 5.7% YoY in October, compared to the revised growth of 4.2%. Retail sales grew 1.9% year-on-year in October, beating the 1.7% forecast but below September's revised 3.0% increase. Month-on-month, sales fell by 0.5%, missing the expected 0.3% drop and reversing September's 0.5% rise. Today's US labour market figures, along with any political developments in the Eurozone, will be key drivers for the EUR/USD exchange rate.

Stay Ahead in the Currency Game

Whether you're a daily FX trader or handle international transactions regularly, our 'Currency Pulse' newsletter delivers the news you need to make more informed decisions. Receive concise updates and in-depth insights directly in your LinkedIn feed.

Subscribe to 'Currency Pulse' now and never miss a beat in the currency markets!

Ready to act on today’s insights? Get a free quote or give us a call on: +44 (0)20 7740 0000 to connect with a dedicated portfolio manager for tailored support.

Important: This blog is for informational purposes only and should not be considered financial advice. Currency Solutions does not consider individual investment goals, financial circumstances, or specific requirements of readers. We do not endorse or recommend any particular financial strategies or products discussed. Currency Solutions provides this content as is, without any guarantees of completeness, accuracy, or timeliness.