GBP/USD Slips as BoE Stance Softens
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GBP/USD edged lower to trade around 1.3120[1] in Friday’s Asian session, easing from a two-day advance of nearly 1%. It is believed that the pair’s pullback reflects renewed weakness in the pound following the Bank of England’s (BoE)[2] dovish hold at its November policy meeting. While the central bank kept interest rates unchanged at 4.0%, the voting pattern revealed a softer stance, with four of nine Monetary Policy Committee (MPC)[3] members favouring a 25-basis-point cut to 3.75%. The BoE signalled that if disinflation continues, policy easing could follow gradually, tempering market expectations for further GBP strength.
Meanwhile, market commentators[4] point out that the US dollar regained footing after recent declines, supported by short covering and a cautious market tone ahead of US data releases. Traders remain attentive to the preliminary Michigan Consumer Sentiment Index[5] due later Friday, as ongoing government shutdown concerns have delayed official reports such as Nonfarm Payrolls and the Unemployment Rate. The limited data flow has left investors relying on private-sector indicators for direction.
Market reports point out that on Thursday, the Challenger Job Cuts[6] report showed US companies announced over 153,000 layoffs in October, the highest for that month in more than two decades. The data reinforced speculation that the Fed[7] may lower rates at its December meeting, with futures pricing showing a 67% probability of a rate cut, up from 62% a day earlier.
From a technical perspective, analysts indicate that GBP/USD[8] faces initial support near 1.3100, followed by stronger demand around 1.3060, while resistance lies at 1.3175 and 1.3220. Near term, the pair could consolidate as traders assess incoming US sentiment data, but the BoE’s dovish signals may limit upside potential for the pound in the medium term.
USD/CAD Extends Gains Amid Fed Cut Bets
The USD/CAD pair extended its bullish momentum and traded around 1.4120[9] in Friday's Asian session and remained close to the six-month peak of 1.4140 reached earlier in the week. It is believed that the US dollar recovered some ground after recent losses, supported by renewed safe-haven demand amid continued uncertainty over the prolonged US government shutdown[10]. However, the upside appears capped as traders weigh softer US labor market signals and the likelihood of an upcoming Fed rate cut[11].
Market commentators[12] point out that investor focus now shifts to the scheduled preliminary Michigan Consumer Sentiment Index, though the absence of key official data such as Nonfarm Payrolls (NFP) and the Unemployment Rate, due to the shutdown, has limited market direction. Meanwhile, the Challenger Job Cuts[13] report revealed that US companies cut over 153,000 jobs in October, the largest monthly total in more than two decades, reinforcing expectations that the Fed could begin easing policy at its December meeting.
Meanwhile, market reports[14] point out that Canadian fundamentals have offered mixed cues. The Ivey PMI slipped sharply to 51.7 in October from 61.6 previously, suggesting a cooling in business activity despite remaining above the expansion threshold. Additionally, markets await Canada’s employment data[15], which could provide further clues about the domestic economic outlook and near-term direction for the Canadian dollar.
Analysts[16] indicate that in the short term, USD/CAD may find support from cautious market sentiment and weak US data that dampen risk appetite. However, medium-term risks lean toward potential US dollar[17] softness if the Fed confirms rate cuts and political gridlock continues in Washington. A sustained break below 1.4050 could signal a corrective pullback, while resistance remains firm at 1.4140.
NZD/USD Weakens Amid Soft Data and Caution
The NZD/USD pair slipped to trade around 0.5620[18] in Friday's Asian session. The kiwi[19] is believed to have weakened because traders chewed up a gloomy bunch of Chinese trade results and a gentler domestic labour market report. The trade surplus in China[20] fell short of expectations of 95.60 billion to 90.07 billion in October and the growth of exports was at 1.1% per year. The poor performance of the data was a blow to the mood surrounding the China-proxy New Zealand dollar considering that New Zealand[21] had close trading relationships with China.
Market commentators[22] note that the New Zealand Unemployment Rate rose to 5.3% in the 3rd quarter the highest since 2016 providing more support to the possibility of a 25-basis-point rate cut by the Reserve Bank of New Zealand (RBNZ) at its November 26 meeting. The weakening data in the labour market has dimmed the prospects of domestic growth and the NZ dollar[23] remains under pressure despite occasional support of the wider weak US dollar.
Market reports[24] indicate that in the US, Challenger layoffs spurred more than 150,000 in October, and it is the highest monthly layoff in over 20 years, which indicates that the resilience in the labour market may be under strain. This made traders place more bets on a Fed rate cut[25] in its next policy meeting, as futures pricing indicated a 70% probability as against 62% the day before. This data topped the progress of the greenback and assisted in containing further losses in NZD/USD.
Analysts[26] point out that in the future, investors will focus on the initial University of Michigan Consumer Sentiment Index later on Friday to see where they go. Weak print would substantiate the anticipation of a US rate cut and offer short-term help to NZD/USD[27]. The medium-term prognosis of the pair is however not very strong, as weak domestic fundamentals and sluggish global demand are still a threat to the downside.
EUR/USD Holds Gains Amid Weakening Dollar Pressure
The EUR/USD pair extended its upward momentum and traded near 1.1530[28] in Friday's late Asian session as the US dollar came under renewed selling pressure. The greenback is believed to have been weakened by the fact that the US labour market[29] data was softer, which strengthened the beliefs that the Fed might decide to stick to its current policy position till the end of the year. The US Dollar Index (DXY)[30] has been trading slightly higher at around 99.80, and the index has recovered slightly since its Thursday low of 99.60, but also the index is limited in strengthening its positions by the deteriorating economic feelings.
Analysts[31] note that investor confidence in the US dollar became undermined as the Challenger layoff news led to the announcement of 153,074 layoffs in October, or 183 percentage points higher than in September. The recent spike in job losses, spurred by the use of AI and cost-cutting[32] initiatives, highlights indicators of decelerating labour demand, which is a key indicator of the policy perspective of the Fed. Market-based pricing using the CME FedWatch[33] facility now implies that the likelihood of the Fed keeping rates within the 3.50%3.75% bracket at its December meeting is only 33%, as opposed to before the week, which foreshadowed 38%.
Market reports[34] indicate that on the European front, the euro was trading with minimal volatility with EC officials perceived to be indicating a stable policy. ECB Vice President Luis de Guindos[35] has indicated that he is comfortable with the current rates saying he is positive about the development of inflation in the services sector. These remarks assisted in anchoring EUR sentiment, though did not add much directional impetus.
Analysts[36] suggest that in the future, traders will turn close focus to the upcoming US Nonfarm Payrolls (NFP) and unemployment statistics that will potentially provide additional information on the strength of the labour market. Lighter readings can maintain short-term support in EUR/USD[37], however, continuing developments related to growth concerns and the difference in transatlantic monetary policies directions can be a medium-term weakness to the pair.
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