December 26, 2024
New Delhi, India
GBP/USD
The British Pound Sterling (GBP) strengthened against its major peers on Tuesday, despite increased dovish expectations surrounding the Bank of England’s (BoE) monetary policy for the coming year.
BoE Outlook and Market Reaction:
- Investors anticipate a 53-basis point interest rate cut by the BoE in 2025, up from 46 bps projected earlier.
- Following the latest Monetary Policy Committee (MPC) meeting, three of nine members voted to reduce rates by 25 bps, a more aggressive stance than anticipated.
- The 6-3 vote split heightened dovish sentiment, pressuring the Pound but failing to derail its current upward momentum.
GBP/USD Movement:
- The GBP/USD pair traded near 1.2570 during the North American session.
- Light trading volumes, attributed to the holiday-shortened week with Christmas Eve and Boxing Day closures, kept movements limited.
Broader Market Trends:
The US Dollar Index (DXY), which measures the Greenback against six major currencies, remained stable around 108.15.
- The Federal Reserve’s dot plot signals a federal funds rate of 3.9% by the end of 2025, indicating multiple rate cuts next year.
- However, market participants foresee a more gradual rate reduction than previously expected, influenced by disinflation trends and potential policy shifts under President-elect Donald Trump.
Key Economic Data Ahead:
- In the U.S., the Initial Jobless Claims report for the week ending December 20 will be released on Thursday.
- Analysts predict a slight drop to 218K from the previous 220K, potentially influencing the US Dollar’s near-term trajectory.
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