USD: Fed minutes support the dollar at the margin

The US dollar is slightly firmer against the euro following publication of the Federal Reserve’s December meeting minutes. Liquidity conditions look constrained into year end, keeping price action prone to short bursts rather than sustained trends. Later today’s US Initial Jobless Claims print will be the next near-term check on labour-market cooling.

The minutes showed a 25bp rate cut, taking the fed funds target range to 3.50% to 3.75%. The discussion leaned towards downside risks to employment and continued disinflation, but the committee remains split on the timing and extent of further easing. Market pricing shifted marginally, with January cut expectations easing back to roughly 15% on Fed funds futures.

GBP: Technical break attempts, but risk appetite is the limiter

Sterling retains a constructive tone versus the euro, though the move lacks follow-through in thin holiday trading. GBP/EUR has drifted up to around 1.1476, sitting just above the 100-day exponential moving average near 1.1470, a level that has capped gains through the late-December rally.

The technical picture is improving, but signals are less reliable with subdued volumes and compressed volatility. If the pair can hold above the 100-day EMA, attention turns to the 1.1520 resistance area. The main caveat is risk appetite: sterling’s upside has been closely tied to equity momentum, which has softened after the recent push to fresh highs.

EUR: ECB pricing offers some insulation, but tone remains soft

The euro remains pressured against the dollar, but downside may be tempered by the view that the ECB is approaching the end of its current easing phase. The ECB recently kept rates on hold and reiterated that policy will be guided by incoming data rather than preset guidance. Money markets continue to assign a low probability to a 25bp cut in February 2026, keeping near-term ECB expectations relatively anchored.

Looking ahead

Focus shifts to US Initial Jobless Claims for confirmation on labour-market momentum. Into the turn of the year, expect low participation and higher sensitivity to headlines. In GBP/EUR, a sustained hold above the 100-day EMA would keep 1.1520 in view, with equity direction likely to remain the key swing factor for sterling.