GBP/USD Muted Ahead of US jobs data
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GBP/USD struggles near 1.2650 as cautious remarks from Federal Reserve (Fed) officials bolster the dollar. While escalation in the Russia-Ukraine conflict has driven safe-haven flows, supporting the greenback, speculation over Trump's policies and the Fed's upcoming interest rate decisions might temper its gains. On Wednesday, Boston Fed President Susan Collins hinted at a cautious stance towards the pace of policy easing. On the sterling front, stronger-than-expected UK Consumer Price Index (CPI) inflation figures have reinforced the Bank of England's (BoE) cautious approach toward future interest rate reductions. UK CPI inflation rose to 2.3% YoY from 1.7%, exceeding the 2.2% forecast, while Core CPI also increased to 3.3%, surpassing expectations of 3.1%. In upcoming sessions, flash S&P Global Purchasing Managers' Index (PMI) data for November, speeches by influential FOMC members, and ongoing geopolitical concerns will determine GBP/USD's trajectory.
EUR/GBP Declines Amid BoE's Cautious Stance
EUR/GBP lost momentum near 0.8333 as the EU Financial Stability Review cited that escalating geopolitical tensions, policy uncertainties, and global trade disputes might fuel economic uncertainty in the region, pressuring the euro. Wednesday's speech by ECB Governing Council member Yannis Stournaras highlighted that the Eurozone is near achieving its 2% inflation target, bolstering market expectations for a 25 basis point rate cut next month. Conversely, following the above-forecast inflation numbers, the Bank of England's (BoE) cautious approach could bolster sterling demand. In the absence of any notable economic data from the UK, Eurozone's latest consumer confidence index and Friday's preliminary Purchasing Managers' Index (PMI) figures will shape market sentiment around the EUR/GBP exchange rate.
AUD/USD Gains Due to RBA Rate Hike Bets
AUD/USD edges higher near 0.6500 as the Reserve Bank of Australia's (RBA) hawkish stance supports AUD. The RBA's November Meeting Minutes noted that board members remain vigilant regarding upside inflation risks and emphasise the importance of maintaining a restrictive monetary policy stance. On the USD front, elevated US Treasury bond yields and the sudden escalation in the Russia-Ukraine conflict have driven safe-haven flows, boosting the greenback. However, market sentiment surrounding the Fed's upcoming monetary policy, following Trump's policies and tax regime, could sway the dollar. In the absence of market-moving data from Australia, traders will closely monitor US weekly Initial Jobless Claims, the Philadelphia Fed Manufacturing Index, and Existing Home Sales for fresh impetus on the AUD/USD exchange rate.
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USD/CAD Subdued by Tepid Canadian dollar
USD/CAD softened near 1.3970 as an uptick in global oil prices boosted the commodity-linked loonie. Tuesday's hotter-than-expected inflation data dampened market expectations of a deeper-than-usual interest rate cut by the Bank of Canada (BoC), further strengthening the Canadian currency. Conversely, recent robust US economic data, along with expectations that US President-elect Donald Trump's policies will likely renew inflationary pressures and limit scope for further rate cuts by the Federal Reserve, could influence the USD's value. Traders will also closely watch developments in geopolitical risks, shifts in crude oil prices, Canada's latest producer price index, and the US economic docket—including weekly Initial Jobless Claims, the Philadelphia Fed Manufacturing Index, Existing Home Sales, and the CB Leading Index—to determine the pair’s direction.
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