GBP: The British Pound experienced a significant decline yesterday. In fact, the pound’s drop of over 1% against both the U.S. Dollar and the Euro marks one of its steepest daily falls against the dollar and is the largest against the euro. Analysts attribute the move to a combination of factors including the Bank of England’s dovish monetary policy outlook, the currency’s high valuation, and extended speculative positions.
EUR: The Euro continues to lose ground due to increased expectations of a rate cut by the European Central Bank in October, which would mark the central bank’s third reduction this year. In fact, earlier this week, Eurozone inflation dropped to 1.8% YoY in September, falling below the ECB’s 2% target and lowest since April 2021. Ultimately, markets now reflect a 95% probability of a 25-basis point rate cut this month.
USD: The U.S. Dollar rose further yesterday, benefiting from yesterday’s robust employment data as well as the uncertainty caused by the Middle East turmoil. Looking forward, today’s spotlight will be on the U.S. non-farm payrolls report. Economists polled by Reuters expect 140,000 job additions, while unemployment is anticipated to keep steady at 4.2%.
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