EUR/USD, GBP/USD, DXY Price Forecast: Fed’s 5.50% Rate to Shape Markets

Market Overview

In recent activity, the GBP experienced a slight downturn with the Nationwide HPI showing a decrease of 0.4% month-on-month, contrasting with modest expectations. This data point underscores the ongoing challenges in the UK housing market, which can impact broader economic sentiment and thus, currency value.

Events Ahead

The ADP Non-Farm Employment Change is anticipated to reflect a slight decline in job additions, dropping from 184K to 179K, potentially softening the dollar and influencing EUR/USD dynamics. The ISM Manufacturing PMI is also on the radar, expected to edge up slightly, indicating a mild expansion in manufacturing activity. The update on JOLTS Job Openings, another key metric, will provide further insights into the labor market’s health.

For GBP/USD, attention turns back to the UK with the Final Manufacturing PMI poised to reaffirm a contraction in the manufacturing sector, maintaining a reading of 48.7. The outcome of the UK’s 10-year Bond Auction will also be watched closely as it provides clues about investor confidence and economic outlook, which are critical for GBP valuation.