At 05:10 ET (09:10 GMT) the pound edged higher, with GBP/USD gaining 0.14% to 1.3535. The euro also rose, with EUR/USD up 0.07% to 1.1622. ING forecasts the DXY dollar index to drift between 99.00 and 99.50, and expects EUR/GBP to stay within 0.8580‑0.8610.
Market participants see the Federal Reserve moving toward a 25‑basis‑point rate cut at its September 16 meeting, a move priced in with a 58% probability. ING projects the August U.S. CPI report to show a 0.4% month‑on‑month headline increase and a 0.2% core rise. The U.S. Treasury market is set for $119 billion of three‑, 10‑ and 30‑year bond auctions this week, alongside the start of a buy‑back programme for longer‑dated securities.
In the eurozone, the European Central Bank is slated to meet on Thursday. Analysts anticipate confirmation of Q2 growth at a 0.4% quarter‑on‑quarter pace and a Sentix confidence reading. ING expects EUR/USD to trade in a tight 1.1580‑1.1640 band on Monday.
Separately, the Saxony‑Anhalt state election on Sunday showed a decline in support for Chancellor Friedrich Merz’s CDU. In the UK, Chancellor John Healey delivered his first major speech in Coventry, claiming the economy is "turning a corner" after six interest‑rate cuts since the 2024 election and noting a stock‑market rally to all‑time highs. He warned that fiscal discipline remains a priority ahead of the October 28 budget, citing legacy borrowing costs from past political turbulence.
ING’s global head of markets, Chris Turner, said the dollar "should really be doing better than it is" given high energy prices and a strong non‑farm payrolls print, but noted that the current constructive equity environment is keeping the dollar subdued. He added that higher energy prices and an "under‑priced" Fed provide short‑term support for the greenback, while questioning the Chancellor’s ability to deliver meaningful pro‑growth measures.
