Movement in the currency market last week was marked by notable weakness in the US dollar, driven by a surprisingly dovish tilt to the Federal Reserve’s latest interest rate cut.
Last week’s key rate movements
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GBP/EUR – Down 0.4% on the week
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GBP/USD – Up 0.4% on the week
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EUR/USD – Up 0.8% on the week
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AUD/USD – Up 0.2% on the week
Pound (GBP)
The Bank of England (BoE) is expected to cut interest rates when it concludes its last policy meeting of the year on Thursday. While the cut is already priced in, the pound (GBP) is likely to be sensitive to the BoE’s policy outlook for 2026.
Euro (EUR)
While the European Central Bank (ECB) will deliver its latest interest rate decision this week, barring any major surprises, it will continue to leave rates on hold. This may lead to greater weight being given to the Eurozone’s latest PMI figures, with the euro (EUR) poised to strengthen if private-sector growth accelerated this month.
US dollar (USD)
November’s non-farm payroll figures will be in the spotlight in the first half of this week. Any signs of a cooling US labour market could pile fresh pressure on the US dollar (USD).
Australian dollar (AUD)
The release of Australia’s latest consumer confidence figures are likely to be in the spotlight for AUD investors this week. A continued improvement in sentiment could help the Australian dollar (AUD) open the session on strong footing.
South African rand (ZAR)
South Africa’s consumer price index is forecast to report inflation remained steady at 3.6% last month, potentially providing some lift for the South African rand (ZAR) in midweek trade.
Canadian dollar (CAD)
This week’s session will kick off with the publication of Canada’s consumer price index. An acceleration of domestic inflation last month is likely to further cement suggestions that the Bank of Canada’s (BoC) cutting cycle is complete and propel the Canadian dollar (CAD) higher.
New Zealand dollar (NZD)
New Zealand’s latest GDP figures could trigger a sharp appreciation of the New Zealand dollar (NZD) later this week if growth rebounded as strongly as forecast in the third quarter.
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