Macro data comes back into focus
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Daily Currency Update
US CPI data was unexpectedly soft in March, giving the FOMC a bit of breathing room as policymakers grapple with the appropriate stance of monetary policy amid significant economic uncertainty. After all the volatility and back-and-forth on tariffs we have seen this week, we are back to watching macroeconomic data and this was a remarkable release yesterday. The question facing FOMC officials is whether inflation will start rising again in the face of a historic increase in the average tariff rate on U.S. imports. Even with President Trump's 90-day pause on reciprocal tariffs, the numerous other tariff increases leaves the average effective tariff rate at the highest rate in a century.GBP/USD has broken back above 1.3000 and now 1.3100 – at the time of writing - after starting the week just above 1.2700. EUR/USD is now above 1.1400, after starting the week at 1.0900. After a slight pause in the GBP/EUR fall, we are now sub 1.1500 and just about to push below 1.1450.
Key Movers
Data earlier this morning showed the U.K. economy grew by a higher-than-expected 0.5% month-on-month in February amid a jump in the services output. A 0.3% expansion in the service sector has driven the surprise jump in growth to 0.5%. Last month, the U.K’s Office for Budget Responsibility halved its growth forecast for the U.K, slashing its outlook from 2% to 1% growth in 2025 and the looming tariff changes may see a reversal in this expected jump over the coming months.Looking ahead, US PPI will end the week's macro data which is due for release at 1:30pm this afternoon (GMT). USD weakness could continue, depending on the outcome and unless we hear of any new tariff changes.
Expected Ranges
- GBP/USD: 1.2980 - 1.3175 ▲
- GBP/EUR: 1.1420 - 1.1560 ▼
- GBP/AUD: 2.0810 - 2.1270 ▲
- EUR/USD: 1.1350 - 1.1490 ▲