USD Strengthens on Fed Delay Expectations — GBP Slips on Fiscal Jitters, EUR Steady but Vulnerable.

• USD – Benefiting from risk-off flows and reduced expectations for Fed cuts; staying firm.

• EUR – Fairly stable but lacking strong upward momentum; remains exposed to external risk and USD moves.

• GBP – Under significant pressure amid UK fiscal concerns and weak technicals; downside risk remains elevated.

USD:

The dollar has strengthened notably, pushed by doubts over near-term rate cuts by Federal Reserve and a shift to safe-haven demand amid recent equity weakness. Traders now price a 65% chance of a rate cut in December, compared with 94% a week earlier, CME FedWatch showed. With U.S. data releases constrained by the government shutdown, investor focus has drifted toward policy and risk appetite rather than fresh fundamentals giving the dollar a structural tailwind.

If the Fed signals it will delay cuts, or if global risk sentiment weakens further, USD could extend gains. If U.S. employment/inflation data disappoints, or the shutdown ends and uncertainty lifts, USD may soften.

---

EUR: 

The euro is showing relative resilience compared to the pound but is still vulnerable given its exposure to USD strength and structural euro-zone headwinds. The European Central Bank has remained on hold at 2.00 % for some time, which hints at limited near-term upside impetus from policy. On the data front, markets are awaiting final October services-sector PMIs and producer price index data for Germany and the euro-zone — the results may influence short-term euro momentum.

Strong USD, weak data in euro-zone, or dovish ECB comments could push EUR lower. Positive euro-zone data (PMI, inflation) or a shift in ECB forward guidance could lift EUR.

---

GBP: 

The pound has come under pressure with markets are increasingly pricing in rate cuts by Bank of England and factoring in weaker UK fiscal prospects. Yesterday markets were pricing in a 33% chance of a rate cut this week, but following yesterdays speech from Rachel Reeves this has gone up slightly, although markets are not pricing it in completely which means if they do cut the GBP could weaken further. The recent pre-Budget comments from the UK Chancellor signalling large fiscal measures (including tax rises) have spooked markets, hurting the GBP outlook.

If the BoE signals further easing, or UK data remains soft, GBP could weaken further. If UK data surprises positively (e.g., wages, employment) or fiscal clarity emerges, GBP could stabilize.

Economic Calendar