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FOMC, ECB, Home sales

Impact on GBP/USD as BoE Signals More Rate Hikes: EUR/USD Maintains Gains Near 1.0950 Ahead of FOMC

As the Bank of England Governor Andrew Bailey testifies, the GBP/USD continues its bullish trend and edges towards 1.2550 in Tuesday’s European trading session. The Pound Sterling is buoyed by the hawkish remarks from Bailey and other BoE policymakers before the UK Parliament.

GBP/USD Surpasses 1.2500 Mark

Tuesday sees the GBP/USD surpassing the 1.2500 mark, reaching a peak not seen since early September near 1.2550. The currency pair’s movements in the near future could be significantly influenced by the BoE policymakers’ insights on policy outlook.

GBPUSD Daily Chart

GBPUSD Daily Chart

Bailey’s Remarks on Inflation and Interest Rate Hikes

Governor Bailey, late on Monday, highlighted the need for vigilance against persistent inflation signs that may necessitate another round of interest rate hikes. He emphasized that a restrictive policy will be necessary for an extended period and dismissed the idea of rate cuts as premature.

Upcoming Testimony Before the Treasury Select Committee

On Tuesday, Bailey along with other members of the Monetary Policy Committee are scheduled to testify before the Treasury Select Committee. If the officials persistently hint at further rate hikes, the Pound Sterling could potentially gain strength against its major counterparts.

US Economic Calendar and Impact on Market Response

The US economic calendar for the American session includes data on Existing Home Sales for October, which is unlikely to elicit a significant market response. The Federal Reserve (Fed) is set to release the minutes from the October 31-November 1 meeting. However, the commentary in this document may be deemed redundant since the weak inflation data that led to market expectations of a Fed policy shift next year was released post-meeting.

Market Trends and GBP/USD Upward Momentum

Concurrently, the FTSE 100 Index in the UK opened lower and was last seen down by 0.5%. Similarly, US stock index futures have shifted into negative territory following a quiet Asian session. If markets witness a return of safe-haven flows in the day’s second half, the US Dollar might resist the bearish pressure and restrict GBP/USD’s upward momentum.

EUR/USD Stability Amid a Weakening US Dollar

The EUR/USD is holding steady around the 1.0950 level, marking positive territory for the fourth consecutive day in early Tuesday trading. The US dollar’s trajectory is influenced by lowering US Treasury bond yields, providing support to the pair. As the market mood remains cautious, attention pivots towards the upcoming Federal Reserve (Fed) minutes, given the heightened expectations of a dovish Fed stance.

Bullish Start to the Week for EUR/USD

Starting on a high note, the EUR/USD showed bullish tendencies at the week’s outset, ending Monday in an advantageous position. The currency pair continued its upward momentum, reaching its highest level since August above 1.0960 during Tuesday’s early European session.

Impact of Positive Risk Sentiment on US Dollar Demand

With risk sentiment taking a positive turn, the US Dollar struggled to generate demand during Monday’s American trading hours, aiding the EUR/USD in maintaining its position.

ECB Policymakers’ Remarks Bolster Euro Strength

In addition, remarks by European Central Bank (ECB) policymakers contributed to the Euro’s strength. Late Monday, ECB Governing Council member Francois Villeroy de Galhau expressed expectations for key rates to remain stable for the upcoming quarters. In a similar vein, ECB policymaker Pablo Hernandez de Cos emphasized that discussions around interest rate cuts were “absolutely premature,” adding that he did not foresee a return to forward guidance on monetary policy from the ECB.

US Economic Calendar and the Impact on Market Positioning

Later in the day, data on October Existing Home Sales will take center stage in the US economic calendar. Following this, the Fed is set to release the minutes from its October 31-November 1 policy meeting during the later part of the American session. Given last week’s weak US inflation data, markets have been heavily factoring in a potential policy shift from the Fed in the latter half of 2024, and this upcoming publication is unlikely to significantly alter market positioning.

Upcoming ECB Speeches and Market Anticipation

Scheduled speeches from ECB President Christine Lagarde and Governing Council member Isabelle Schnabel will also take place later in the day. Should officials continue to counter the market’s anticipation of ECB rate cuts next year, the Euro could demonstrate resilience against the USD.


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  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.

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