Dollar Slides as Bank of England Hikes Rates to 4.00%: EUR/USD Near 1.1260, Gold Holds Above $4,100
The US dollar kept sliding on Thursday as the Bank of England raised interest rates to 4.00% — its first hike since August 2023 — and the post-midterm dollar sell-off rolled into a second day. The dollar index fell toward 101.25, its lowest since September 30, while the euro, the pound and gold all pushed higher.
The Bank of England's decision, taken by an 8-to-1 vote, lifted its benchmark rate by 25 basis points from 3.75%. Sterling jumped to around 1.3490 against the dollar, touching 1.3503 — its highest level in more than seven weeks — before settling back slightly.
Why the dollar is falling
The dollar's weakness started with the US midterm elections, in which Democrats won control of both houses of Congress. Markets read the result as removing a major source of uncertainty, and the dollar closed lower against all seven major currencies it is tracked against.
The move continued on Thursday for three reasons. First, the Bank of England hike made the pound more attractive against the dollar. Second, US yields kept falling — the 10-year Treasury yield dropped to 4.85%, its lowest since September 10. Third, traders are now looking ahead to Friday's October US jobs report, and positioning is cautious.
The pairs at a glance
EUR/USD: trading near 1.1260, after reaching 1.12731 earlier in the session. Eurozone inflation printed at 4.0% year on year in October — the first reading at 4% since September 2023 — with core inflation at 2.5%.
GBP/USD: near 1.3490, after the Bank of England's 25-basis-point hike to 4.00%.
USD/JPY: around 157.95, with the yen slightly firmer on the day.
Dollar index (DXY): near 101.25, down about 0.6% on the session toward a one-month low.
Gold (XAU/USD): holding above $4,100, around $4,129, after gold's run past $4,100
this week. Gold gained 3.63% on Wednesday alone, its first close above $4,000 since October 29.
Jobs data sets up Friday's big test
The week's labour data has been mixed. US private-sector employment rose by 86,000 in October according to ADP, beating the 69,000 economists expected, while the ISM services PMI came in at 54.5 against a 54.8 forecast — still expanding, but a touch softer than hoped.
Friday's official October jobs report is the print that matters most. The consensus looks for 65,000 new jobs after just 29,000 in September, with forecasts ranging from 35,000 to 125,000. FXStreet reported
Gold and the euro tend to move sharply in the first hour after the release — gold's median first-hour range after the last six payrolls reports was about $64, roughly three times a normal weekday — so traders should expect volatility whatever the number is.
What it means for forex traders
For traders, the message of the week is that the dollar's direction now depends on two things: whether Friday's jobs number supports or undercuts the case for the Federal Reserve to keep cutting rates, and whether the Bank of England's hike marks the start of a wider gap between UK and US policy. That matters most when trading EUR/USD
A soft payrolls print would likely extend the dollar's slide and keep gold above $4,100. A hot print would do the opposite — and with the euro sitting just below resistance at 1.1265–1.1272, a strong dollar bounce could send EUR/USD back toward 1.1225 quickly. Either way, the calm of the last few weeks is over: the dollar is moving again, and Friday's jobs report decides the next leg.
Follow the jobs report reaction live on the Zimbuck News
You will find the full reaction on the Zimbuck News page.
FAQ
Why is the dollar falling this week? The dollar weakened after Democrats won both houses of Congress in the US midterms, and the slide continued as the Bank of England raised rates and US bond yields fell.
What did the Bank of England do? It raised its benchmark interest rate by 25 basis points to 4.00%, its first increase since August 2023, by an 8-to-1 vote.
Why is gold above $4,100? A weaker dollar and falling bond yields make gold more attractive. Gold rose 3.63% on Wednesday to $4,063.84 and has held above $4,100 since, with $4,068, $4,092 and $4,118 the next resistance levels traders are watching.
What is EUR/USD doing? The pair is trading near 1.1260, up on broad dollar weakness, with resistance at 1.1265–1.1272 and support near 1.1225.
What should traders watch next? Friday's October US jobs report (nonfarm payrolls), expected at 65,000 new jobs. It is the biggest scheduled event of the week for the dollar, gold and EUR/USD. Discuss it in the Zimbuck Market News group
This is market news and general information only, not financial advice. Join the conversation on Zimbuck
