. Dollar Weakness Lifts Pound and Euro Amid Election Focus

Dollar Weakness Lifts Pound and Euro Amid Election Focus

Dollar Weakness Lifts Pound and Euro Amid Election Focus

04 Jul 2024

Dollar weakness boosts the pound and euro, with elections in focus.

The pound and euro gained against the dollar after weak U.S. economic data pushed the greenback lower on Wednesday, coinciding with the start of voting in Britain and the approach of the French election.

On Thursday, Sterling was at $1.2757, up 0.1%, following a 0.46% rise the previous day, reaching a three-week high. The euro was at $1.0801, also up 0.1%, after a 0.4% gain on Wednesday, hitting a three-week top.

The pound is now up for the year against the dollar, making it the best-performing G10 currency in 2024.

The dollar declined due to softer-than-expected U.S. economic data on Wednesday, including a weak services report and ADP employment report, indicating a slowing economy, following an increase in initial unemployment benefit applications last week.

“The data is feeding expectations that maybe the labor market is weakening and the Fed will be able to cut rates later in the year,” said Jane Foley, head of FX strategy at Rabobank.

Markets now anticipate nearly 50 basis points of Federal Reserve interest rate cuts in 2024, likely starting with a 25-basis-point move in September and a second cut by year-end, which also brought down U.S. Treasury yields.

The most important monthly U.S. labor market data, non-farm payrolls, due on Friday, is expected to show an increase of 190,000 jobs in June, following a rise of 272,000 in May, according to a Reuters poll of economists.