Dollar drops despite Fed warning rates will be held higher for longer
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Daily Currency Update
Yesterday marked the highly anticipated interest rate decision by the US Federal Reserve, during which Chairman Jay Powell confirmed that borrowing costs would remain unchanged. The decision to maintain the status quo was widely expected, shifting attention to the messaging concerning the potential future trajectory of policy. Powell cautioned the markets to anticipate the current rate of 5.5% to persist for a considerable duration, aiming to address the persistent inflationary pressures that have escalated over recent months.Powell rebuffed notions suggesting the possibility of a future increase in borrowing costs, which some observers had speculated might be hinted at in either the official statement or his remarks. It was this apparent reluctance to entertain the prospect of a future rate hike that prompted a weakening of the dollar following the press conference. Consequently, the GBP/USD pair ascended from 1.2490 before the announcement to its current trading level of 1.2540. Similarly, the EUR/USD pair mirrored this movement, climbing from 1.0675 to its present position at 1.0725.
Key Movers
Yesterday, much of the Eurozone observed the annual May Day public holiday, resulting in a quiet day across the bloc. Similarly, in the UK, there was little significant domestic news to influence the movement of the sterling. Attention now turns to tomorrow's release of April jobs data from the United States. The headline Non-Farm Payrolls reading is anticipated to reveal an addition of 238,000 individuals to the workforce for the month, with the unemployment rate expected to remain stable at 3.8%.Expected Ranges
- GBP/USD: 1.2490 - 1.2600 ▲
- GBP/EUR: 1.1660 - 1.1745 ▼
- GBP/AUD: 1.9085 - 1.9220 ▲
- EUR/USD: 1.0655 - 1.0755 ▲