Gentium FX | Daily Report - 2nd October 2023 - US Dollar Remains Strong

GBP: After initially outperforming other G10 currencies at the beginning of the summer, the British Pound reversed most of its gains by the end of the season. This decline was driven by market expectations that the Bank of England would maintain its current monetary policy in the upcoming meeting, putting pressure on the Pound. As a result, Sterling experienced a nearly 4% drop against the US Dollar in the third quarter. Looking ahead, with no economic data expected from the UK this week, the movement of GBP pairs will be influenced by global market sentiment.

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EUR: Meanwhile, the Euro has been recovering from recent losses as indications of decreasing inflation in the Eurozone have led to speculation that additional rate hikes by the European Central Bank may be postponed. Additionally, concerns about a potential contraction in the GDP during the latter half of the year have been a hindrance to the Euro's performance.

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USD: On the other hand, the US Dollar Index has remained strong and is trading close to its recent 10-month high at 106.27. This is a result of the Federal Reserve's consistently hawkish rhetoric, which led to the US Dollar's best quarterly performance in a year last month. Looking forward, market participants will closely watch Jerome Powell's upcoming speech, as any further hawkish comments could boost the US Dollar and provide tailwinds for the currency.

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