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November 2024 Update On Foreign Exchange Markets

foreign exchange markets

RegencyFX give their monthly update on developments in the foreign exchange markets. In November Trump’s election has impacted the foreign exchange markets and the Pound saw a rollercoaster month.

The foreign currency market in November 2024 was marked by several key events:

  • US Dollar Strengthens: The US dollar index (DXY) appreciated by almost 3% since early November. This was driven by the election of Donald Trump and the subsequent uncertainty surrounding trade and tariffs.  
  • Eurozone Weakness: The eurozone was hit hard by the election of Donald Trump, as his protectionist policies are expected to hurt the region’s open economy.  
  • Fed Rate Cut: The Federal Reserve cut its policy rate by 25 basis points to 4.75% on November 7th, as expected.

British Pound (GBP)

The GBP experienced a rollercoaster of fluctuations throughout the month, largely driven by ongoing concerns over the UK’s economic performance and the ramifications of recent political decisions. While the Bank of England cut its interest rate from 5% to 4.75% amidst stubborn inflation figures, concerns about economic growth were prominent. The pound faced downward pressure early in the month as economic data indicated weaker-than-expected GDP growth, causing traders to speculate about potential rate cuts in early 2025.

However, a surprising uptick in manufacturing activity towards the end of the month provided some respite for the GBP, which saw a temporary rally against both the EUR and USD. Nonetheless, the currency ended the month slightly down against the USD due to persistent dollar strength and broader market sentiments leaning toward the safety of the greenback.

Euro (EUR)

The EUR had a turbulent run in November, mirroring some of the challenges faced by the GBP. The European Central Bank (ECB) held its key interest rates steady amid signs of a slowing eurozone economy. Inflation rates remained elevated, prompting speculation around the ECB’s next moves. Economic indicators pointed to stagnation in key member countries, with Germany’s manufacturing sector showing distress.

Political uncertainties related to fiscal policies in Italy and debates over EU budgetary frameworks contributed to volatility within the eurozone. The EUR suffered against the USD early in the month but found some strength against the GBP as UK economic woes deepened. Overall, the single currency closed the month with slight losses against the USD but managed to stabilise as market attention shifted to upcoming economic reports.

United States Dollar (USD)

The USD emerged as the strongest performer in November 2024, benefiting from a combination of solid economic fundamentals and investor appetite for safe-haven assets amid global uncertainties. The Federal Reserve signalled its commitment to maintaining higher interest rates for an extended period, which bolstered the dollar’s appeal. Economic data released throughout the month showed robust job growth and stable consumer spending, leading many to expect that the Fed could pause any potential rate cuts well into 2025.

Additionally, ongoing geopolitical tensions and concerns surrounding global trade negotiations bolstered demand for the USD as a safe haven. The dollar was particularly strong against the EUR and GBP, reflecting a broader market sentiment favouring stability in uncertain times. Concerns over inflation persist, but the Fed’s measured approach to monetary policy seemed to reassure investors.

Conclusion

Overall, November 2024 has been characterised by volatility and contrasting economic indicators for the GBP, EUR, and USD. While the USD thrived on strong economic fundamentals and interest rate expectations, both the GBP and EUR struggled under the weight of domestic challenges and uncertain geopolitical landscapes. As we move into December, market participants will be closely watching upcoming economic releases and central bank communications to gauge future trends in these key currencies.

Currency ranges in November

GBP/EUR

High: 1.2093 on November 11, 2024

Low: 1.1889 on November 2, 2024.

GBP/USD

High: 1.3041 on November 5, 2024.

Low: 1.2510 on November 22, 2024.

GBP/AUD

High: 1.9771 on November 6, 2024.

Low: 1.231 on November 24, 2024.

EUR/USD

High: 1.0933 on November 6, 2024.

Low: 1.0398 on November 22, 2024.

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