Key Headlines:

• USD Strengthens, EUR Weakens Following Trump’s Election
• BoE and Federal Reserve Rate Decisions Expected Today

Yesterday

Yesterday, "Trump trades" were in full force, with the U.S. dollar strengthening widely and stocks reaching fresh highs.

The euro faced significant pressure, declining across the board due to concerns over potential tariffs from Trump, which raised fears of further economic strain in the eurozone. This has sparked speculation that the ECB may need to consider rate cuts beyond what markets currently expect.

Trade tariff worries also weighed on the Australian dollar, which weakened against other major currencies.

In Germany, Chancellor Olaf Scholz, following the breakdown of his coalition government, announced a confidence vote set for January 15th and proposed a snap election scheduled for the end of March.

Today’s Rates

Today's Interbank Rates at 09:58 am against GBP movement.

GBP>EUR – 1.2003

GBP>USD – 1.2906

EUR>GBP – 0.8329

EUR>USD – 1.0756

GBP>CAD – 1.7922

GBP>AUD – 1.9472

GBP>SEK – 13.944

GBP>AED – 4.7414

GBP>HKD – 10.034

GBP>ZAR – 22.495

GBP>CHF – 1.1312

GBP>PLN – 5.2078
 
 

Today’s Key Takeaway's



Rate Cuts Expected: Both the Fed and BoE are anticipated to lower rates from 5% to 4.75% today, with markets already factoring in these adjustments.

Critical Post-Decision Commentary: Investors are closely watching the statements following the rate decisions for clues on future policy direction.

Bank of England Focus:

The BoE’s response to last week’s budget, which revealed a notable increase in government borrowing, will be a focal point. This development has led markets to lower their expectations for rate cuts over the next year.

Governor Bailey is also expected to address potential economic impacts tied to tariffs and policies under Trump’s administration.

Markets currently see a 39% probability of an additional 25 basis point cut from the BoE in December.

Federal Reserve Outlook:

Fed Chair Powell will likely face questions on how Trump’s presidency could affect economic growth, inflation, and borrowing costs.

Although some Fed officials have hinted at a possible pause in rate cuts, this has not been fully factored into market expectations. Currently, markets are assigning a 61% probability of a 25 basis point rate cut in December.

USD Market Activity: Investors have been locking in profits from recent USD gains. However, if the Fed’s tone is more hawkish today, another USD rally could follow.

7th November 2024

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