Key Headlines:

·        GBP: Markets scale back expectations for a rate cut by the Bank of England.

·        USD: Decline in geopolitical tensions eases pressure on the US dollar.
 

Yesterday Recap

Risk Aversion Dominates Early Trading: Markets reacted negatively to Ukraine's first attack on Russian soil using US missiles, prompting Russia to expand its nuclear doctrine to include responses to attacks on its territory. This initially led to declines in equities and risk-sensitive currencies, with safe havens like CHF, JPY, and USD gaining support.

Markets Stabilise Later in the Day: Sentiment improved after the US National Security Council downplayed Russia’s statement as consistent with previous rhetoric. Safe haven gains were largely reversed by the close of European trading.

Today’s Rates

Today's Interbank Rates at 09:52 am against GBP movement.

GBP>EUR – 1.2000

GBP>USD – 1.2671

EUR>GBP – 0.8332

EUR>USD – 1.0557

GBP>CAD – 1.7708

GBP>AUD – 1.9452

GBP>SEK – 13.910

GBP>AED – 4.6527

GBP>HKD – 9.8610

GBP>ZAR – 22.974

GBP>CHF – 1.1218

GBP>PLN – 5.2080

Today’s Key Takeaways

GBP Strengthens on Higher-Than-Expected CPI:

·        Inflation data exceeded forecasts, reducing the likelihood of a December rate cut and trimming market expectations for the total number of BoE rate cuts during the easing cycle.

·        Markets now anticipate only 60bps of cuts by the end of 2025.

Improved Risk Sentiment:

·        Reports from Reuters suggest Vladimir Putin may be open to a Ukraine ceasefire agreement with Trump, boosting risk appetite.

Key Data Ahead:

·        Eurozone Q3 negotiated wage figures are due, though their impact on EUR may be limited given recent disinflationary trends.

Geopolitical Events in Focus:

·        Continued attention on geopolitical developments and their potential effects on currency markets.

20^th November 2024

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