The GBP/USD pair slipped to near 1.300 following September's slower-than-expected UK inflation data. The annual Consumer Price Index (CPI) rose to 1.7% in September from 2.2% in August. Core CPI, excluding volatile food and energy items, advanced by 3.2% year-on-year in September, compared to 3.6% in August, falling short of the market consensus of 3.4%. The UK September Services CPI inflation declined to 4.9% year-on-year from August’s 5.6%. Additionally, speculation that the Bank of England (BoE) might accelerate its rate-cutting cycle will further underpin Sterling. On the USD front, the US dollar is significantly influenced by the speeches of FOMC members, market sentiment around the escalating tensions in the Middle East, and sluggish Chinese economic data. The GBP/USD exchange rate dynamics will be driven by broader market sentiments around the UK inflation figures in today’s trading sessions.

EUR/USD Struggles Ahead of ECB Decision

The EUR/USD pair continues to face downward pressure ahead of the widely expected 25 basis point cut by the European Central Bank (ECB) on both the Main Refinancing Operations and the Deposit Facility Rate during tomorrow’s meeting. On the USD front, better-than-expected jobs and inflation data have influenced market sentiment around the next Fed interest rate cut, causing fluctuations in the USD. Markets will keenly observe the Harmonised Index of Consumer Prices (HICP) data from the Eurozone, which is due tomorrow, along with Trade Balance figures. Additionally, Core Retail Sales m/m and Unemployment Claims from the United States could affect the Euro-to-Dollar exchange rate. However, the ECB's Monetary Policy Statement and President Christine Lagarde's speech during the post-meeting press conference will be key drivers for the EUR/USD pair.

EUR/GBP Buoyed Following UK and German Data

The EUR/GBP pair rose to near 0.8380 levels following the softer UK Consumer Price Index (CPI) report for September, indicating that prices grew at a slower-than-expected pace, cooling down inflationary pressures. Annual headline inflation softened to 1.7%, below the Bank of England’s target of 2%. A closely watched indicator by the central bank, Services Inflation, grew by 4.9%, slower than 5.6% in August. Rising bets around an additional rate cut by the Bank of England (BoE) this year could influence sterling prices. In the Eurozone, market participants are awaiting the ECB's Monetary Policy Statement and President Christine Lagarde's speech, looking for fresh direction for the EUR/GBP exchange rate dynamics.

NZD/USD Declines Amid Speculations of RBNZ Jumbo Rate Cut

The NZD/USD slipped to near 0.6050, as the latest New Zealand economic data showed that inflation has slowed to its lowest level in over three years. New Zealand's Consumer Price Index (CPI) increased by 2.2% year-on-year, down from a 3.3% annual increase in the previous quarter, falling below the RBNZ’s 1-3% target band for the first time since early 2021. Softening inflation figures have fuelled market speculation around the Reserve Bank of New Zealand’s upcoming interest rate decisions, weighing on the Kiwi dollar. On the USD front, robust jobs reports and inflation data have reduced market expectations of aggressive policy decisions by the Fed, supporting USD. RBNZ’s interest rate speculations, US economic data, and Fed commentary will influence the NZD/USD in the near term.

USD/CAD Struggles Following Cooler Canadian Inflation Figures

The USD/CAD pair lost momentum following softer Canadian inflation figures. The Headline Consumer Price Index (CPI) declined to 1.6% in September, from 2.0% in August, and below the forecast of 1.8%. Cooling inflationary pressures have bolstered hopes for a larger-than-usual Bank of Canada rate cut next week. Additionally, concerns over oil supply disruptions from the Middle East could foster bearish sentiment about crude oil prices, further lowering the commodity-linked Loonie. On the USD front, market sentiment around the Fed’s upcoming interest rate decision due to tamed inflation figures and rising demand for safe-haven currency due to escalating Middle East conflicts could further support the Greenback. Along with the Canadian economic docket – featuring the release of Manufacturing Sales and Housing Starts data, market perceptions regarding USD and Crude Oil price dynamics will influence the USD/CAD exchange rate in the coming sessions.

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