FX Markets Steady as USD Softens; GBP Adjusts Post-Budget and EUR Holds Firm.

• USD – Dollar trades slightly softer as markets price in higher odds of Fed rate cuts in early 2026.

• EUR – Stable ECB policy expectations keep EUR relatively firm.
  

• GBP – Sterling remains reactive following the Autumn Budget as markets assess fiscal impacts on growth and outlook.

USD:

The dollar is trading with a slightly softer tone this morning as markets continue to adjust to the growing likelihood of Federal Reserve rate cuts in early 2026. With U.S. markets partially subdued due to the Thanksgiving holiday period, liquidity remains thinner than usual, contributing to a more subdued price action. Recent U.S. data has been mixed — not weak enough to trigger aggressive selling, but not strong enough to revive the dollar’s prior upward momentum. As a result, USD is drifting within established ranges, with traders largely waiting for next week’s key macro releases to provide clearer direction. Near-term risks remain tilted toward gradual downside as yield differentials continue to narrow.

EUR: 

The euro is holding steady, supported by the same narrowing rate gap that has underpinned it in recent sessions. With markets increasingly pricing U.S. easing, the eurozone’s comparatively stable policy stance has kept EUR on firmer footing. However, momentum remains limited: investors continue to weigh uneven euro-area data and are cautious about committing to a breakout in either direction. Spill-over from UK fiscal developments earlier in the week has had only modest impact, with EUR proving resilient against sterling and broadly stable versus the dollar. Overall, EUR looks comfortable within its mid-week range, with modest upward bias continuing to build if USD remains under pressure.

GBP: 

Sterling remains sensitive following Wednesday’s Autumn Budget, as markets continue to digest the fiscal measures and their implications for growth and the UK’s broader macro outlook. Early market reaction has been mixed: while some investors welcomed clarity on the government’s fiscal path, concerns linger about whether the measures are sufficient to support demand in 2026. GBP/USD is fluctuating near the lower end of recent ranges as the pound reacts to shifting expectations for the Bank of England, with traders questioning whether softer domestic momentum could bring forward rate-cut expectations. Against the euro, sterling remains fragile, with EUR/GBP trading with a modest upward bias as investors reassess UK-specific risks. Volatility may remain elevated through the week as markets refine their post-budget positioning.