The currency markets globally are fairly quiet this morning as traders, no doubt, square their books in advance of a number of important economic releases. The GBP/USD cross remains well supported above 1.3300 handle, whereas the EUR/USD pair continues to languish around lows near 1.1550. Market participants are particularly focused on the upcoming US ISM Services PMI data, which is expected to influence both pairs significantly.
The GBP continues to feel the heat with expected rate cuts from the Bank of England (BoE) next week. According to analysts, this expectation is hanging like an anchor around the currency’s neck, helping to hold it down at a historical low against the dollar. US Dollar’s rebound is running into headwinds as odds of September Fed rate cut climb. This has resulted in a confounding environment for investors.
In European trading on Tuesday, the euro/dollar pair showed little volatility as the market awaited key data from across the Atlantic. Even though the Euro area economy has surprised on the upside over this last summer, risks are still there. Inflation fears are starting to give way to worries about the potential weakening of wage signals. This risks cementing a final ‘insurance cut’ in the Euro area, with markets increasingly speculating on a full rate cut by the end of this year or early 2026.
The recent EU-US deal and German changes to their accelerated spending plans have got commodity markets speculating on the Eurozone. These major advancements have ushered in an unprecedented wave of hope for the region’s economic prospects. Doubts remain, as significantly, full-year CPI and PCE inflation estimates are closely eyed by investors seeking clarity on wage growth.
Currency traders have been keeping a close eye on gold, as its price has stagnated under a one-week peak. Despite this plateau, analysts are maintaining that gold still has bullish potential.
“Gold price flat lines below one-week top; bullish potential seems intact.” – www.fxstreet.com
With the markets awaiting major data releases, both GBP/USD and EUR/USD are set up at interesting inflection points.
“EUR/USD stays depressed near 1.1550 ahead of US ISM PMI.” – www.fxstreet.com
“GBP/USD holds steady near 1.3300, awaits US ISM Services PMI data.” – www.fxstreet.com
Traders are bracing for the start of monetary policy pivots in the world’s four largest economies. Such a narrow focus on future economic indicators underscores the deeper uncertainty pervading the currency markets.