Euro Near 19-Month Low Against Dollar Amid Fed Rate-Hike Bets

The euro remained near a 19-month low against the US dollar early Friday, with EUR/USD trading around 1.1063 after declining for three consecutive sessions. The euro's decline coincided with higher US Treasury yields and growing expectations of further Federal Reserve (Fed) rate hikes.

New York Fed President John Williams said on Thursday that further monetary tightening would likely be needed to return inflation to the central bank's 2% target, without specifying the timing. Interest-rate markets assigned approximately a 14.5% probability to a 50-basis-point rate hike in December, while the US Dollar Index (DXY) held near 103.18, its highest level since April 2025.

Sterling also weakened, with GBP/USD trading close to 1.3234 despite fresh UK data showing gross domestic product (GDP) growth of 0.7% in the third quarter, up from 0.5% in the previous quarter. The result matched forecasts but provided limited support against the stronger dollar.

Attention now turns to Friday's eurozone GDP and employment figures, followed by the US Producer Price Index (PPI). These releases could provide further indications of economic conditions and influence interest-rate expectations for the Fed and European Central Bank (ECB).

---

GBP: Sterling Remains Weak Despite Stronger Growth

GBP/USD: 1.3234 | EUR/GBP: 0.8358

Sterling remained near a four-week low against the US dollar early Friday, with GBP/USD trading around 1.3234 following Thursday's decline. Sterling remained subdued despite stronger UK growth figures, amid higher US Treasury yields and expectations of further Fed rate hikes.

The UK economy expanded by 0.7% in the third quarter, up from 0.5% in the previous quarter and in line with forecasts. Monthly GDP increased by 0.2% in September, following no growth in August. Services output rose by 0.9% during the quarter, while construction contracted by 0.7%, highlighting differences in performance across the economy.

Markets continued to anticipate further Bank of England (BoE) tightening, with interest-rate pricing indicating approximately a 75% probability of another rate hike in December. However, sterling's response remained muted as investors continued to assess the difference between BoE and Fed policy expectations.

Against the euro, sterling traded within a narrow range, with EUR/GBP hovering around 0.8358. The pair remained above support near 0.8350, although gains were limited below 0.8370. Investors will now monitor next week's UK employment and inflation releases for further indications of economic conditions and the BoE's potential policy direction.

Key technical reference levels for GBP/USD: Resistance sits near 1.3280, followed by 1.3315, while support sits around 1.3221, followed by 1.3200.

Key technical reference levels for EUR/GBP: Resistance sits near 0.8370, followed by 0.8380, while support sits around 0.8350, followed by 0.8335.

---

EUR: Euro Weakens Despite Expectations of ECB Rate Hike

EUR/USD: 1.1063

The euro extended its decline against the US dollar on Thursday, with EUR/USD falling towards 1.1063 and trading near its weakest level since April 2025. The pair lost approximately 0.3% during the session as rising US Treasury yields and stronger Fed rate-hike expectations continued to support the dollar.

Meanwhile, a Reuters survey conducted between 10 and 12 November showed that all 71 economists expected the ECB to raise its deposit rate by 25 basis points to 2.75% in December. Of those surveyed, 46 anticipated that December would mark the final increase of the current tightening cycle, while 25 expected another rate hike, potentially in early 2027.

Despite expectations of further ECB tightening, the euro remained under pressure as investors assessed the relative monetary policy outlooks of the ECB and Fed. Eurozone inflation reached 4.0% in October, maintaining concerns about persistent price pressures. Attention now turns to Friday's updated eurozone GDP and employment figures, followed by US producer inflation data, which could influence near-term interest-rate expectations.

Key technical reference levels for EUR/USD: Resistance sits near 1.1100, followed by 1.1170, while support sits around 1.1000, followed by 1.0951.

---

USD: Dollar Consolidates Near Nineteen-Month High

DXY: 103.18

The US dollar remained near its highest level since April 2025 early Friday, with DXY trading around 103.18 following Thursday's advance. The index maintained most of its recent gains as higher US Treasury yields and expectations of further Fed tightening continued to support the currency. However, the dollar's upward movement moderated following three consecutive sessions of gains.

US Treasury yields increased on Thursday amid a reassessment of the Fed's interest-rate outlook. The two-year yield rose to approximately 4.87%, while the benchmark 10-year yield reached 5.11%. Interest-rate markets indicated an approximately 85% probability of a 25-basis-point Fed rate increase in December, while the probability of a larger 50-basis-point increase was approximately 14.5%.

Meanwhile, New York Fed President John Williams indicated that further monetary tightening would likely be necessary to bring inflation back towards the central bank's 2% target. His comments reinforced concerns about persistent price pressures, although he did not specify the timing of future increases. Investors now await Friday's US producer inflation figures, which could influence expectations for the Fed's December policy decision.

---

Other Currencies: AUD and NZD Weaken While Yen Nears 160 per Dollar

AUD/USD: 0.6785 | NZD/USD: 0.5545 | USD/JPY: 159.89 | GBP/JPY: 211.53

The Australian dollar extended its losses against the US dollar on Thursday, with AUD/USD falling towards 0.6800 before declining further to around 0.6785 early Friday, its lowest level since January. The Australian dollar's decline coincided with higher US Treasury yields and expectations of further Fed tightening. Meanwhile, Australian consumer inflation expectations remained at 5.3% in November, highlighting persistent domestic price pressures as the Reserve Bank of Australia (RBA) assesses the effects of previous rate hikes.

The New Zealand dollar also weakened, with NZD/USD trading near 0.5545 as stronger Fed rate expectations added pressure. New Zealand's BusinessNZ Performance of Manufacturing Index (PMI) declined to 54.9 in October from a revised 56.3 in September. Although manufacturing activity remained in expansion, slower growth in production and new orders indicated moderating momentum, adding to concerns about the domestic economic outlook.

Meanwhile, the Japanese yen remained near the 160-per-dollar level after briefly reaching it on Thursday. USD/JPY traded around 159.89 early Friday, while GBP/JPY stood near 211.53. The yen remained under pressure amid widening US–Japan interest-rate differentials, despite expectations of further Bank of Japan (BoJ) tightening. Japanese officials reiterated concerns about excessive currency movements. Separately, a New York Fed report detailed ¥79.4 billion in yen purchases made on behalf of the US Treasury in July 2026, compared with approximately ¥15.4 trillion in intervention by Japanese authorities during the July–September quarter.

---

Current Rate Table

---

Market Lookahead

Friday, Nov 13

• Eurozone GDP & Employment Change (Q3)
• US Producer Price Index (PPI) & Core PPI (Oct)

Monday, Nov 16

• CAD CPI & Core CPI (Oct)

Tuesday, Nov 17

• UK Employment & Unemployment Data
• UK Average Earnings (Sep)

---

Stay Ahead in the Currency Game

Whether you're a daily FX trader or handle international transactions regularly, our 'Currency Pulse' newsletter delivers the news you need to make more informed decisions. Receive concise updates and in-depth insights directly in your LinkedIn feed.

Subscribe to 'Currency Pulse' now and never miss a beat in the currency markets!

---

Ready to act on today’s insights? Get a free quote or give us a call on: +44 (0)20 7740 0000 to connect with a dedicated portfolio manager for tailored support.

---