Dollar gains ahead of Federal Reserve interest rate decision
Daily Currency Update
Financial markets are awaiting the latest interest rate decision from the US Federal Reserve this evening with Fed Chair, Jay Powell, expected to keep borrowing costs unchanged at 4.5%. This will be Powell's first policy decision since Donald Trump’s inauguration, amid expectations that the President favours lower rates, even as the US economy continues to perform strongly. With this economic outperformance in mind, we may see Powell indicate a slower pace of rate cuts may be needed to prevent stamp out inflation which has drifted higher in recent months.EUR/USD fell back to around 1.04 this morning before recovering a little to currently sit at 1.0430. GBP/USD is down a touch to 1.2445.
Key Movers
Bank of England Governor, Andrew Bailey, is due to take questions from the Treasury Select Committee about the latest Financial Stability Report this afternoon. With UK economic growth slowing, it will be interesting to see Bailey's thoughts on the outlook for 2025 given the limited wiggle room he has, to cut rates given inflation remaining above target. That aside, it is a pretty quiet day with the next big event (after the Fed), tomorrow's European Central Bank interest rate decision at lunchtime.Expected Ranges
- GBP/USD: 1.2360 - 1.2500 ▼
- GBP/EUR: 1.1875 - 1.2000 ▲
- GBP/AUD: 1.9860 - 2.0030 ▲
- EUR/USD: 1.0360 - 1.0500 ▼