FOMC minutes provide support for the US dollar
Thursday 23 February, 2023
Daily Currency UpdateMinutes from the latest FOMC meeting released yesterday provided little information about the extent of the support surrounding the decision to further downshift the pace of the rate hikes. The downshift was based on the assessment of a slowing economy that faced declining inflation, with risks appearing more balanced. The US dollar extended its gains after the FOMC minutes with EURUSD briefly trading below 1.06 and GBPEUR at 1.1385, its lowest level since January.
Key MoversThe latest UK PMI data beat forecasts and showed business activity in the UK, especially in the services sector, picking up sharply in February, while the latest look at the government books showed public sector net borrowing boosted by better-than-expected tax receipts and in surplus in January, which resulted in the pound rising sharply against the USD and EUR after the data release. GBP/EUR could see increased fluctuations as the final inflation reading for the Euro area prints today. With expectations of CPI confirmed to have softened to 8.6% from 9.2%, any deviation from preliminary figures could sway the Euro.
- GBP/USD: 1.2005 - 1.2075 ▼
- GBP/EUR: 1.1325 - 1.1385 ▲
- EUR/USD: 1.0575 - 1.0635 ▼