US Dollar Hits Two-Month High as Market Anticipates Modest Fed Rate Cuts
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Daily Currency Update
The US dollar surged to a two-month high against major currencies this morning, fuelled by growing market bets that the Federal Reserve will opt for smaller, incremental rate cuts in the near term. This shift in monetary policy expectations is strengthening the dollar, as traders anticipate the Federal Reserve will prioritise caution, which could dampen global demand for riskier currencies and potentially create volatility in emerging markets.Key Movers
Several economists predict that today's slowdown in wage growth will prompt the Bank of England to cut interest rates at its next meeting in early November. Regular wage growth across Great Britain slowed to 4.9% from June to August, down from 5.1% the previous month, indicating a weakening labour market that could weigh on the pound.If the Bank of England signals a rate cut, it may further pressure the GBP against major currencies, potentially increasing volatility in the FX market as investors reassess their expectations for UK monetary policy.
Expected Ranges
- GBP/USD: 1.3045 - 1.3125 ▲
- GBP/EUR: 1.1975 - 1.2025 ▲
- GBP/AUD: 1.9465 - 1.9555 ▲
- EUR/USD: 1.0845 - 1.0915 ▼