Limited Upside
GBP: The British Pound held steady after the Bank of England voted 5–4 to keep interest rates at 4.0%. Governor Andrew Bailey’s cautious tone reassured markets that no immediate cuts were coming, though a December reduction remains likely. However, inflation at 3.8% keeps pressure on policymakers and uncertainty surrounding Chancellor Rachel Reeves’s upcoming budget limits Sterling’s upside despite modest post-decision recovery.
EUR: The Euro slipped as weak German and Eurozone data hurt confidence. Industrial production rose just 1.3%, and retail sales unexpectedly fell 0.1%, reinforcing growth concerns. This fuelled speculation that the ECB will keep policy accommodative for longer. Although some analysts see the Euro as undervalued, sentiment remains fragile, with upcoming German trade figures likely to guide the currency’s short-term direction.
USD: The U.S. Dollar eased from recent highs as improved risk sentiment reduced demand for safe-havens. Moreover, ongoing concerns over a government shutdown and disrupted air travel pressured the greenback, while cautious Federal Reserve commentary limited upside. Strong corporate earnings continue to lend support, but weaker consumer sentiment or dovish Fed signals could trigger correction, leaving the Dollar vulnerable to short-term pullbacks.
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