Fed chair hints on interest rate cuts
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Daily Currency Update
Jeremy Hunt delivered the UK Spring budget yesterday and there were a few key points taken from the release. National Insurance was cut by 2p in the Pound for the self-employed and employees, and child benefits to be paid to households where the highest-earning parent earns up to £60k – the previous threshold was £50k. With little to no surprises from the budget, Sterling’s movement was muted before and after the release. Later, in Wednesday’s session Fed chair Powell started day one of his two-day testimony to the House Financial Services Committee in Washington. Powell confirmed that incoming data will determine when rate cuts begin, but while the taming of inflation continues rate cuts can be expected this year. It was this that took GBP/USD to a session high of 1.2750 and EUR/USD briefly over 1.0900. GBP/USD continues to trade above 1.2700 and EUR/USD trades just under 1.0900.Key Movers
Another big day ahead for macroeconomic data with Fed chair Powell entering the second day of his testimony. However, headlines will likely be held by Europe as they deliver their latest interest rate announcement and update the markets on monetary policy. The European Central Bank is widely expected to keep interest rates at the record 4.5% despite falling inflation within the Eurozone. Policymakers are likely to repeat that more evidence is needed that inflation is under control and that ongoing wage increases will not give it persistence. Markets have all but factored in a rate cut in June with up to 100 points worth of cuts in 2024. Any indicators from today’s releases that cuts are going ahead when planned, could see volatility in the Euro.Expected Ranges
- GBP/USD: 1.2690 - 1.2780 ▲
- GBP/EUR: 1.1620 - 1.1750 ▲
- GBP/AUD: 19360 - 1.9550 ▼
- EUR/USD: 1.0850 - 1.0940 ▲