Bank of England Poised to Match Fed’s Easing
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Daily Currency Update
Fears that the US may be on the brink of a recession are rippling through global markets, impacting currencies worldwide. After rallying to its highest level since early June on Friday, the GBP found some support on Monday as it became apparent that the Bank of England will likely keep pace with the Federal Reserve in easing monetary policy.This expectation of coordinated rate cuts has led to a cooling off in the pound's strength, as both central banks potentially moving toward lower rates could diminish the relative appeal of their currencies in global markets. This situation is causing volatility and potentially weakening their positions against other major currencies.
Key Movers
On Monday, the global flight from riskier assets intensified dramatically as concerns grew that the US may be on the brink of a recession, rattling investors and shaking financial markets. This heightened uncertainty had a significant impact on the US dollar, which initially saw a surge in value as investors sought safety in the currency.US central bank policymakers quickly intervened, pushing back against fears that weaker-than-expected July job data signaled an impending recession. They cautioned that while the economy isn't in freefall, the Federal Reserve may still need to cut interest rates to prevent a downturn. Such a move could weaken the dollar in the long term, as lower rates typically reduce the currency's appeal to investors.
Expected Ranges
- GBP/USD: 1.2685 - 1.2755 ▲
- GBP/EUR: 1.1615 - 1.1685 ▲
- GBP/AUD: 1.9545 - 1.9655 ▼
- EUR/USD: 1.0905 - 1.0965 ▼