GBP/USD: Pound Resists Dollar Despite A Hawkish US Fed

The euro trended lower versus the US dollar across the previous week. The euro US dollar exchange rate declined 0.8%, snapping three straight weeks of gains. The pair closed on Friday at US$1.1080. The euro is edging higher versus the US dollar as the new week kicks off.

The euro was broadly out of favour versus its peers last week, as investors digested parting comments from European Central Bank President Mario Draghi. Draghi chaired his final ECB monetary policy meeting. As analysts had expected the ECB kept policy unchanged, after having eased policy just last month.

Draghi bowed out with gloomy words, waring that slowing global growth and Brexit uncertainty pose a risk to growth in the eurozone economy. Concerns over Germany, Europe’s largest economy, being on the brink of recession are also increasing. Investors fear that the ECB will have to act again to boost stagnant low inflation and lacklustre growth. The prospect of further cuts hit demand for the common currency.

This week there are several key macro-economic releases that investors will pay attention to. These include eurozone inflation figures and GDP data from France and Italy. Brexit developments will also be closely monitored. Eurozone countries would benefit from a Brexit deal therefore any Brexit progress could boost the euro.

Dollar Investors Look Ahead To Busy Week

The dollar was finally on the rise last week, after three weeks of declines. Data showing that the US manufacturing sector could be stabilising helped lift the greenback in the previous week. The manufacturing pmi unexpectedly jumped for a second straight month in September, after months of decline, amid the ongoing US — Sino trade dispute. The better than forecast data helped quell concerns that the US economy could be heading towards recession.

This week volatility in the US dollar could pick up. There are several key events which could impact the dollar. These include US Federal Reserve monetary policy decision, the US non-farm payroll report and US GDP data.

Investors are currently assuming a 94% probability of the Fed cutting interest rates this month. What investors really want to know is whether the Fed will continue cutting or whether this will be the final cut in the current easing cycle.

What do these figures mean?
When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.

For example, it could be written:

1 EUR = 1.12829 USD

Here, €1 is equivalent to approximately $1.13. This specifically measures the euro’s worth against the dollar. If the U.S. dollar amount increases in this pairing, it’s positive for the euro.

Or, if you were looking at it the other way around:

1 USD = 0.88789 EUR

In this example, $1 is equivalent to approximately €0.89. This measures the U.S. dollar’s worth versus the euro. If the euro number gets larger, it’s good news for the dollar. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.