Investing.com — Sterling traded firmer on Friday while the euro edged higher, as the dollar softened on pre-midterm position-trimming and renewed AI-stock jitters.
Sterling rose 0.41% to $1.3432 against the dollar, while the euro edged 0.20% higher to $1.1203. The pound gained 0.20% against the euro to 1.1990, as of 07:07 ET (11:07 GMT).
ING’s Francesco Pesole said “the greenback still faces downside risks from oscillating AI sentiment” after tech-stock pressure drove Treasury buying.
He sees “precautionary unwinding of net-long positions” before Tuesday’s midterms, with a Democratic sweep priced near 68% in prediction markets. “We’d be cautious in chasing the USD upside in the next few days,” Pesole said.
Yesterday’s U.S. data leaned hawkish, ING noted. Third-quarter growth was 3.4%, above consensus, and September core PCE rose 0.3% month-on-month, “enough to keep the Federal Reserve on high alert.”
Markets price a December hike. The FOMC blackout ends today, with Thomas Barkin (neutral), Mary Daly (moderate dove) and Alberto Musalem (moderate hawk) due to speak. Pesole does not expect them to add much.
Sterling’s move looks dollar-led rather than UK-driven, with no UK data catalyst today. The domestic backdrop is supportive, though. UBS analysts “expect the Bank of England (BoE) to start a short rate-hiking cycle next week,” with a second hike in the first quarter of 2027.
They add that “strongly short GBP positioning leaves scope for further sterling gains” and that the UK budget “did little to change the macroeconomic outlook.”
GBP/USD rose 1.22% in October, marking its strongest monthly performance since July’s 1.65% gain. If current levels hold, the pair would post its highest weekly close since September 11 and record a third consecutive weekly gain.
GBP/EUR gained 2.40% in October, its biggest monthly advance in the 2026 data and a fifth consecutive weekly gain.
The pair reached a high of 1.1995 on Friday, surpassing its previous peak of 1.1967 recorded on October 28 and 29, and reaching its highest level in the data since January 1.
Euro zone growth beat forecasts, with third-quarter GDP up 0.4% quarter-on-quarter in Eurostat’s flash estimate, above the 0.3% ING’s Francesco Pesole expected.
