Last Friday, the EUR/USD witnessed a significant appreciation of 1.4%, reaching 1.0566 after hitting a year's low of 1.0418. This movement in the currency pair attracted attention in the financial markets. Meanwhile, the GBP/USD managed to recover to 1.2680 after three consecutive sessions of failing to break below 1.25. DBS' Senior FX Strategist Philip Wee closely observed these trends.
BoE's Stance on Rate Cuts in December
BoE officials have not signaled another cut in December. This decision has implications for the British pound and the overall economic outlook. The European Central Bank board member Isabel Schnabel played a crucial role by narrowing the gap with the Fed and pushing back dovish rate cut bets in the Eurozone. EU CPI inflation returned to the 2% target in October after a brief dip to 1.7% YoY in September, with core inflation remaining high at 2.7%. These inflation figures provide valuable insights into the economic conditions of the Eurozone.In terms of GDP growth, the Eurozone recession fears were not validated. GDP growth improved to 0.4% QoQ sa in 3Q24 from 0.2% in 2Q24. This positive growth indicates a certain level of stability in the Eurozone economy.Regarding the GBP/USD, it recovered to 1.2680 after struggling to break below 1.25 in the past three sessions. The Bank of England's decision to cut rates by 25 bps to 4.75% on November 7 did not lead to further downward pressure on the pound. This shows the resilience of the GBP/USD in the face of monetary policy changes.The movements and decisions in these currency pairs and by central banks have significant implications for global financial markets and economic stability. Investors and traders closely monitor these developments to make informed decisions. The Eurozone's economic indicators and the BoE's stance on rates will continue to shape the future of these currencies.READ MORE