The EUR/USD is anticipated to maintain its medium-term bearish trajectory, trading below 1.06, while the GBP/USD or "Cable" remains subdued under 1.2650. The Bank of England (BoE) is poised to lower its interest rates by 25 basis points today, motivated by the country's constrained finances and a pressing need to bolster the economy. Meanwhile, geopolitical tensions simmer as the European Union may become the next target for tariffs from President Trump, who finds himself with reduced leverage over China compared to the first trade war.
In corporate news, Alphabet, Meta, and Microsoft are projected to invest approximately $228 billion on capital expenditures by 2025, reflecting a robust outlook for technological advancement. Concurrently, the US 10-year yield experienced a 12 basis point decline following softer-than-expected ISM numbers and announcements from the US Treasury.
The EUR/USD has depreciated after two days of gains, now trading below 1.0400 during European trading hours on Thursday, while the GBP/USD has continued its decline toward 1.2450 in the same session. The BoE is on course to reduce its key interest rate by 25 basis points to 4.50% following the February policy meeting. Upcoming US jobs data on Friday is expected to offer clearer short-term directions for both EUR/USD and GBP/USD pairs.
The recent rebound of the US dollar has exerted downward pressure on both EUR/USD and GBP/USD. The EUR/USD attempted to breach the 50-day moving average (DMA) but was unsuccessful, whereas the Cable encountered resistance from top sellers above its own 50-DMA. Analysts suggest that should the US dollar ease further, both currency pairs might extend their recovery without altering their medium-term bearish trends.
The anticipated rate cut by the Bank of England comes amid economic challenges that necessitate fiscal support. The reduction is seen as a strategic move to provide relief and stimulate growth within an economy grappling with financial constraints. While this decision aligns with broader economic policies, it also reflects the complex financial landscape currently characterizing global markets.
President Trump's potential imposition of tariffs on the European Union introduces another layer of complexity to international trade relations. The previous trade conflict with China showcased Trump's aggressive tariff strategy; however, his position is notably weaker this time around due to evolving economic dynamics and strengthened resilience from China.
In corporate sectors, substantial investments by major tech companies such as Alphabet, Meta, and Microsoft signal confidence in continued technological growth and innovation. These capital expenditures are expected to drive advancements across various technological fields, potentially reshaping market landscapes in the coming years.
The drop in the US 10-year yield highlights investor reactions to recent economic data and Treasury announcements. The softer-than-expected ISM numbers suggest potential adjustments in economic forecasts, influencing yields and investment decisions.
As the EUR/USD and GBP/USD continue their respective trajectories, market participants closely monitor upcoming economic indicators for insight into future movements. The forthcoming US jobs data is particularly pivotal, as it could sway market sentiment and provide a clearer picture of economic health.