Pound and Euro elevated by weak US Dollar

Daily Currency Update

The Euro traded in supported levels for the fourth consecutive day on Tuesday against the US Dollar during the early European session. A weaker US dollar and lower US Treasury bond yields help the euro to pick up momentum. Investors will focus on the FOMC Meeting Minutes later today.

The pound also appreciates against the weaker US Dollar towards 11-week highs, although the majority of the gains of late have been in the weaker US Dollar the pound also holds some support in the Bank of England Governor Andrew Bailey’s speech at the Henry Plumb Memorial Lecture on Monday. Bailey mentioned that overall inflation exceeded well past the UK central bank's main 2% target, reaching a peak of 11.1% in October of 2022. Despite UK inflation retracting to 4.6% with the latest data reading, there's still plenty of ground to cover before reaching the 2% target once more, Governor Bailey was vocal suggesting it's certainly too soon to declare victory over inflation in the UK.

The decline in the Dollar is contributed by the increased risk appetite and lower US Treasury yields. This sentiment is fuelled by expectations of a less aggressive stance from the Federal Reserve in raising interest rates after last week's release of softer inflation figures.