The GBP/USD pair continues to decline for the third consecutive day, trading around the 1.3200 mark. Ongoing geopolitical tensions in the Middle East are exerting downward pressure on the risk-sensitive GBP/USD pair. The better-than-expected US ADP Employment Change data for September and improved US Treasury yields have strengthened the USD, weighing on the GBP/USD pair. In the absence of fresh UK economic data, sterling will be driven by broader market sentiment. Today’s US September ISM Services Purchasing Managers Index (PMI), weekly Initial Jobless Claims, and final S&P Global Services PMI could influence the GBP/USD’s price dynamics.

EUR/GBP Buoyed Following BoE’s Bailey Speech

The EUR/GBP gained traction around 0.8380 due to a weakening Pound following Bank of England (BoE) Governor Andrew Bailey’s speech. OnThursday, Governor Bailey suggested that the UK central bank could become “a bit more aggressive” and “more activist” on rate reductions if inflation continues to decline. Bailey also mentioned that he will closely monitor developments in the Middle East. In the Eurozone, last month’s comments from European Central Bank (ECB) President Christine Lagarde emphasised that any additional rate cuts would be data-driven. With no major data releases on the horizon for the Pound, the EUR/GBP pair will be influenced by market sentiment as investors await the HCOB September Purchasing Managers’ Index (PMI) and Producer Price Index (PPI) from Germany and the Eurozone, due today.

EUR/USD Softened by Stronger USD

The EUR/USD pair extended its downward momentum due to a stronger USD, influenced by the uncertain outlook in the Middle East and market speculation around the Federal Reserve's (Fed) expected substantial rate cut in November. The September US ADP Employment Change data exceeded expectations, with 143,000 new jobs added—surpassing the median forecast of 120,000 and the revised August figure of 103,000. The JOLTS Job Openings rose to 8.04 million in August from a revised 7.71 million in July. Today’s economic docket includes the final Eurozone and US PMI prints, along with the usual US Weekly Initial Jobless Claims and the US ISM Services PMI. Speeches from key FOMC members could further strengthen the USD, affecting the EUR/USD pair.

AUD/USD Holds Steady Amid Rising Middle East Tensions

The AUD/USD pair remains under downward pressure following stronger-than-expected retail sales growth and rising geopolitical tensions in the Middle East. Australia’s Trade Balance for August came in at 5,644 million month-on-month, beating the forecast of 5,500 million and exceeding July’s surplus of 5,636 million. However, both Exports and Imports dipped by 0.2% month-on-month in August. While the hawkish stance of the Reserve Bank of Australia (RBA) limits the downside for AUD, commodity prices could further support it. In the absence of significant Australian data, the pair’s movement will largely be dictated by broader market sentiment and external factors.

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