Daily FX Report – Sterling Under Pressure

GBP: The British Pound appears to be losing strength as changing interest rate expectations and uncertainty surrounding the UK budget put pressure on the currency. Additionally, a busy week of data releases could further weigh on the Pound. The first key event is the UK’s August labor market report, set to be released later today. Following that, markets are anticipating tomorrow’s UK inflation data, while Friday’s highlight will be the release of UK retail sales figures.

EUR: The Euro edged lower in advance of the European Central Bank’s policy meeting on Thursday, where a 25-basis point rate cut is widely anticipated. Furthermore, business activity in the Eurozone unexpectedly declined in September, and inflation fell below the ECB’s 2% target. This suggests that the eurozone economy may be in a weaker state compared to the last meeting of policymakers.

USD: The U.S. Dollar held steady at its highest level in over two months, as ongoing expectations that the Federal Reserve will slow the pace of rate cuts provided support. Comments from Fed officials reinforced this view, particularly in light of recent data showing strength in U.S. inflation and the labor market. As a result, investors are positioning for a smaller rate cut in November.