Markets Quieten Down As Christmas Approaches
Impact on GBP:
Sterling halts 3 day losing streak in GBP/EUR cross
Sterling was given some rest bite by the Euro overnight, with the single currency halting its three-day winning streak, trading around €1.2050 during the early European hours on Tuesday. This upside move in GBP/EUR cross is attributed to the decline in the Euro amid rising bets of further rate reduction by the European Central Bank (ECB).
The Pound had previously weakened against its major counterparts, driven by increasing expectations of a dovish policy stance from the Bank of England in the coming year. Market participants now anticipate a 53-basis-point (bps) rate cut in 2025, up from the previously expected 46 bps. This shift follows a 6-3 vote by the Monetary Policy Committee (MPC), with three out of nine members advocating for a 25 bps rate reduction, which investors interpreted as signaling a dovish trend for the year ahead.
Happy Christmas from all at VFX.
Impact on EUR:
EUR/USD trades sideways as cooling Eurozone inflation keeps downside bias afloat
EUR/USD consolidates in a tight range around $1.0400 in Tuesday’s European session. Thin trading volume due to holidays in Forex markets on Wednesday and Thursday on account of Christmas Day and Boxing Day, respectively, has kept the pair’s price action muted.
No major data. German banks closed for Christmas Eve.
Impact on USD:
Feds hawkish shift underpins USD
The US Dollar stands firm near a two-year peak and continues to draw support from the Federal Reserve's (Fed) hawkish signal that it would slow the pace of interest rate cuts in 2025. The British Pound on the other hand, is undermined by the Bank of England's (BoE) split vote decision to leave interest rates unchanged and a dovish outlook. This, in turn, validates the near-term negative outlook for the GBP/USD pair.
No Major Data
Get More Value for Your Business with VFX
Stay up to date with all of the latest currency news, our daily market updates provide insight into major currency movements helping your business make international transactions at the right time.
At VFX, our team of expert brokers support businesses in navigating through the ever-changing currency market every single day, making sure that potential FX risk is managed through the use of top-of-the-art data, analytics and tools.
If your business is looking to mitigate FX risk, then please contact our team today or call +44 (0) 20 7959 6900.