Daily FX Report - GBP, USD and EUR Update

The pound had its first down day against the dollar for a while yesterday, while the dollar stabilised and the euro failed to regain parity.

After a wide rally at the start of the week, sterling was carried lower among a wider market reversal as investor scepticism grew about the likelihood that central banks will become more dovish any time soon.

GBP/USD is up 0.21% this morning at 1.1349, having reached lows in the 1.22s and 1.23s yesterday.

Solid US data releases created a pushback against the narrative of a central bank pivot, with San Francisco Fed President Mary Daly explicitly saying she didn’t expect there to be rate cuts next year, in direct contrast to futures that are still pricing in rate cuts from the second quarter of next year.

The dollar index counter-corrected back up to almost 112 yesterday before a stabilisation at 111.00 during the Asian session.

Although the euro butted its head against dollar parity yesterday it was unable to break through, before falling back on the greenback’s recovery to 0.9895.

EUR/USD is up 0.32% this morning at 0.9911.

There is a long list of more Fed speakers to keep an eye on today, with Charles Evans, Lisa Cook, Christopher Waller and Loretta Mester all contributing hot air to keep market speculation churning.

Other macro data today includes the UK construction PMI report, EU retail sales, US continuing and initial jobless claims.