The EUR/USD pair hovers around 1.0800 weighed down by the US dollar's demand and supply dynamics. Amid geopolitical tensions, expectations of modest Federal Reserve (Fed) rate cuts, and the upcoming US Presidential election on 5th November have fuelled the rising demand for USD. In the Eurozone, the annual inflation rate indicates that the disinflationary trend is consistent with current monetary policies. Additionally, on Wednesday, ECB member Mario Centeno suggested the probability of a 50 basis points rate cut in December. Investors will keenly monitor Flash PMI figures from the Eurozone and the US for fresh insights into the EUR/USD trajectory. Beyond PMI data, US bond yields and geopolitical developments could further shape market sentiment around the Euro to US dollar exchange rate.

GBP/USD Muted Ahead of Global PMI Prints

The GBP/USD pair dipped to below 1.2950 ahead of today's Purchasing Managers' Index (PMI) figures from both the United Kingdom (UK) and the United States (US). The market anticipates a downturn in October's UK Services PMI, expected to increase to 52.2 from 52.4 in the previous month. Bank of England Governor Andrew Bailey's recently assured that inflationary pressures remain in control have prompted investors to adopt a cautious stance on Sterling. On the other hand, October's US Services PMI figures are expected to edge down to 55.0 from 55.2. Moreover, fluctuations in US Treasury yields and the US Dollar Index (DXY) could also impact the dollar. The pound to US dollar exchange rate will be shaped by broader market sentiment around today's PMI figures.

GBP/EUR Strengthened by Risk-Off Market Mood

The GBP/EUR pair climbed to 1.2034, marking a five-day high. While the risk-averse market sentiment supported the euro against its major currency peers, rising demand for the USD weighed negatively on the correlated euro. Despite mixed results from HCOB's latest Purchasing Managers' Index (PMI) figures, the euro showed resilience. Manufacturing PMI increased to 45.9 in October from 45.0 in September, surpassing the expected 45.1. Meanwhile, Services PMI slipped to 51.2 in October from 51.4 in September, down from the market consensus of 51.6. On the pound front, the UK government's upcoming Autumn Budget, a speech by Bank of England (BoE) Monetary Policy Committee member Catherine Mann, and BoE Governor Andrew Bailey's lecture at the Mike Gill Memorial are poised to influence market sentiment around the pound. While the UK's PMIs are expected to remain steady, any unanticipated results in PMIs could create volatility for the Pound to Euro exchange rate.

USD/CAD Struggles Following BoC's Oversized Rate Cut

The USD/CAD pair remains near 1.3800 following an oversized 50 basis points rate cut by the Bank of Canada (BoC) amid a rapid decline in annual inflation rate to 1.6% in September. Weaker labour market data and fears of a potential economic slowdown led the BoC to make this substantial cut—the largest since the COVID-19 pandemic. Additionally, continued geopolitical risks stemming from Middle East conflicts have bolstered crude oil prices, supporting the commodity-linked Loonie. On the dollar front, a modest rise in US Treasury bond yields and speculations around the Fed's upcoming interest rate decision support the dollar. However, uncertainty around the upcoming US Presidential election, Flash US PMI prints, and oil price dynamics will significantly influence the USD/CAD price trajectory.

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