Dollar rallies on hot PPI data
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Daily Currency Update
GBP/USD dipped yesterday as the latest US Producer Price Index exceeded expectations with a rise of 0.6% in February compared to January. This was far bigger than the 0.3% monthly gain that markets were expecting and as a result, the dollar rallied across the board. After Tuesday saw the Consumer Price Index unexpectedly push higher this reading means that markets are starting to pare back the amount of interest rate cuts the Federal Reserve will enact throughout the year. Although most still expect rates to start being cut in June we may only see two reductions in borrowing costs rather than three throughout 2024. GBP/USD managed to touch 1.2820 yesterday but was driven lower by the data with it eventually bottoming out around 1.2730. It’s another quiet day from the UK with little data of note. Next week brings the latest UK inflation figures and the Bank of England’s interest rate decision so there could be some domestically driven volatility for the pound as a result of these. GBP/USD is currently at 1.2740 with GBP/EUR continuing to hinge around 1.17.Key Movers
EUR/USD has mirrored GBP/USD’s move lower over the past 24 hours on the back of the rising PPI numbers seen from the States yesterday. The pair fell from 1.0945 before the data touched a low of of around 1.0875 in Asian trading overnight. We may see some further swings this afternoon with a couple of releases due from the US. At 12:30 pm we have the monthly Empire State Manufacturing Index followed at 2 pm by Prelim University of Michigan Consumer Sentiment data. That aside it’s a pretty quiet end to the week with nothing of note due from the Eurozone. Focus is already now likely turning to Wednesday’s Federal Reserve interest rate decision. EUR/USD sits at 1.0885.Expected Ranges
- GBP/USD: 1.2690 - 1.2820 ▼
- GBP/EUR: 1.1680 - 1.1750 ▼
- GBP/AUD: 1.9360 - 1.9500 ▲
- EUR/USD: 1.0840 - 1.0960 ▼