Sterling surges against USD to levels not seen in over two years
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Daily Currency Update
Last week, the British pound rallied to its highest level in over two years, driven by the widening interest rate gap between the U.S. and the UK. The Federal Reserve made an aggressive move by cutting interest rates by 50 basis points, while the Bank of England (BoE) opted to hold its rates steady. This divergence in monetary policy has had a notable impact on the FX market, as it shifted investor sentiment towards the pound.The ongoing divergence between the U.S. and UK interest rates could continue to influence GBP/USD movements, with the market reacting to further rate cut expectations in the U.S. and potential rate adjustments from the BoE in the near future.
Key Movers
The euro continued to weaken after eurozone PMI data fell short of expectations, with the composite PMI dropping to 48.9 in September from 51.0 in August, signalling contraction. Economists had expected a reading of 50.6, and the below-50 figure indicates shrinking activity in both the services and manufacturing sectors.This decline could influence FX markets as the European Central Bank may welcome the slowdown in input and output price inflation, potentially putting an October interest rate cut in play which could further pressure the euro.
Expected Ranges
- GBP/USD: 1.3235 - 1.3295 ▲
- GBP/EUR: 1.1945 - 1.1995 ▲
- GBP/AUD: 1.9455 - 1.9535 ▲
- EUR/USD: 1.1055 - 1.1125 ▲