Sterling, Dollar in Focus Ahead of Central Bank Meetings

Initial estimates of US Q3 GDP came in above expectations at 3.0%, but the dollar had a relatively muted reaction to the print. Sources reported that President Trump is favouring Powell, a dove, as the next head of the Fed, prompting a fall in the dollar and US 10-year yields. Euro-dollar had fallen below 1.1600 for the first time in three months.

Previous Day's Market Highlights

Initial estimates of US Q3 GDP came in above expectations at 3.0%, but the dollar had a relatively muted reaction to the print. Sources reported that President Trump is favouring Powell, a dove, as the next head of the Fed, prompting a fall in the dollar and US 10-year yields. Euro-dollar had fallen below 1.1600 for the first time in three months.  
 
Brent crude hit $60 a barrel for the first time in over two years. Oil prices have gained recently on speculation that OPEC will extend production cuts and as tensions between Iraq and the Kurds weigh on production.
 
The New Zealand dollar fell on comments from the new finance minister that adjusting the RBNZ’s monetary policy mandate could lead to lower interest rates. The new government has proposed adding an employment target to the mandate.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1309 1.1362 1.1069 2.58%
GBP / USD 1.3140 1.3398 1.3027 2.77%
EUR / USD 1.1619 1.1880 1.1574 2.58%
GBP/AUD 1.7131 1.7241 1.6675 3.28%
GBP / NZD 1.9191 1.9334 1.8367 5.00%
GBP / CAD 1.6856 1.7002 1.6350 3.83%

Today's Market Highlights

Releases today include US spending data (12:30 BST), gains in which could offer the dollar support ahead of the Fed meeting this week. Other releases include UK ConsumerCredit (09:30 BST), the Eurozone’s Economic Sentiment Indicator (10:00 BST), and Preliminary German CPI (13:00 BST).
 
The Fed is expected to keep interest rates on hold on Wednesday but signal that a rate hike in December remains in play. A rebound in Friday’s NonFarm Payrolls figure after September’s hurricane-driven drop could support the dollar and expectations of a December hike. The White House is expected to announce the next Fed Chair this week.
 
On Thursday, the Bank of England could announce that it will hike interest rates, reversing last year’s cut to 0.25%. With markets largely pricing in a rate hike, the greater risk for the pound is to the downside if the BoE takes markets by surprise and holds steady.

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Consumer Credit (Sep) £1.500B £1.583B
09:30 GBP Mortgage Approvals (Sep) 66.05K 66.58K
10:00 EUR Economic Sentiment Indicator (Oct) 113.4 113.0
12:30 USD Personal Consumption Expenditures - Price Index YoY (Sep) 1.6% 1.4%
12:30 USD Core Personal Consumption Expenditures - Price Index YoY (Sep) 1.3% 1.3%
12:30 USD Personal Spending (Sep) 0.8% 0.1%
12:30 USD Personal Income (Sep) 0.4% 0.2%
13:00 EUR Preliminary German CPI YoY (Oct) 1.7% 1.8%
14:30 USD Dallas Fed Manufacturing Business Index (Oct) 21.0 21.3
00:01 GBP Gfk Consumer Confidence (Oct) -10 -9