US Dollar, Sterling and Euro Insights.

USD: Today holds the potential for heightened volatility in the U.S. dollar as the economic calendar brims with impactful releases. The focal point for financial markets is the imminent FOMC decision. Following the release of the November Consumer Price Index report, the Federal Reserve is expected to maintain the status quo, keeping borrowing costs within the current range of 5.25% to 5.50%. Chairman Powell’s cautious stance suggests a likelihood of maintaining a tightening bias in the Fed’s communication.

GBP: On this December 13th, the British pound remains relatively stable against the euro and USD. The UK jobs report unveiled robust headline data on employment change and unemployment but fell short on wage data. Wages, including bonuses, are unlikely to surpass 8% in the UK, a positive development in the Bank of England’s battle against inflation. The BoE rate decision today is anticipated to see Governor Andrew Bailey resisting rate cuts and upholding the higher-for-longer narrative, potentially bolstering the pound.

EUR: Today’s market scenario reflects a slightly improved outlook for the German and Euro Area economy, as indicated by the latest ZEW report, surpassing market forecasts. German current conditions have seen a marginal improvement, although they remain historically low. The US inflation report expected later in the day may impact markets, but the focus remains on the upcoming FOMC meeting and Thursday’s ECB policy decision. Both central banks are expected to maintain their current policies, with post-release press conferences providing insights into potential future interest rate cuts.