6-week high against the US
Sterling continues to trade near a 6-week high against the US dollar this morning as traders anticipate the Federal Reserve to cut the interest rate by 25 bps on Wednesday evening. Recent macro data is pointing to a gradual cooling of the US economy which will further suggest a rate cut is all but certain. The pair is still trading in a tight range, however, as it seems further buying is being restricted until the release of US employment data this afternoon.
Sterling is also trading near a 6-week high against the Euro following a ‘relief rally’ in the wake of the UK budget last month. However, the downgrade to GDP assumptions following the budget and rising unemployment are expected to put continued pressure on GBP in the mid-long term, with some strategists now predicting the rate may drop off in the new year. It is worth noting that some major banks such as Barclays and the Bank of America are still confident that the GBP/EUR rate will continue to recover though.
President Zelensky is expected to present a revised peace plan to the US today, as he is adamant that Ukraine will not concede any land to Russia. Yesterday, Trump showed his frustrations at the lack of progress being made, but European leaders were shown side-by-side with Zelensky, helping relieve him from some of the pressure from the US to get the deal done. The leaders were also worried that the deal presented by the US would potentially leave Ukraine open to future attacks and invasions, however, the European leaders are walking a tightrope between backing Ukraine and keeping the US onboard. Zelensky is also maintaining his stance that any changes to their borders would need to be authorised by a public referendum.