Currency Market Update- Predicted Stability

The British Pound has outperformed both the Euro and the U.S. Dollar during the Thanksgiving period. In fact, stronger UK data as well as relative rate expectations have supported the Pound. Despite some choppy month-end movements, the Pound is expected to maintain its outperformance, with analysts predicting stability around current levels and an unchanged Bank of England decision in December.

The Euro is under pressure this morning due to a political deadlock in France, where the government’s failure to meet budget demands raises the risk of a no-confidence vote. This uncertainty could weigh on the Euro. In fact, the Pound-Euro exchange rate trades above recent ranges, with the potential for a retest of the 2024 highs, depending on political developments and the outcome of budget negotiations.

The U.S. Dollar has gained further strength following Trump’s recent tariff threats, with the greenback benefiting from his aggressive geopolitical stance. However, while the Dollar is experiencing a rebound, analysts suggest it could face resistance, especially with concerns about future rate cuts and economic data. Moreover, December’s traditional USD weakness might also lead to a potential slowdown in its rally.