Dollar gains as Fed holds rates. BoE expected to cut
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Daily Currency Update
The US Federal Reserve chose to leave interest rates unchanged last night as was widely expected. Markets are expecting the Fed to continue to hold rates where they are until more data about the impact on Donald Trump's tariffs' becomes available over the coming months. Fed Chairman, Jay Powell, stated that “uncertainty about the economic outlook has increased further" although he gave some reassurance that the US economy was currently performing well. Market took this as an opportunity to push back expectations on when the Fed will begin to cut rates, and the dollar gained as a result. EUR/USD is back under 1.13 this morning and GBP/USD back under 1.33. The losses for the pound are not as great as could have been however with the news that later today we may get an announcement of some sort of trade agreement between the US and UK.Key Movers
Today’s big event is the Bank of England’s interest rate decision due at midday. The Bank is expected to cut rates by 0.25% after holding steady at the previous two meetings. The messaging about the future path of interest rates will be the key area of interest as well as updated projections re: inflation and growth in the accompanying Monetary Policy Report. BoE Governor, Andrew Bailey, is expected to highlight the headwinds' tariffs are causing the economy so we could see the chances of future rate cuts increase once his accompanying press conference is wrapped up.Expected Ranges
- GBP/USD: 1.3180 - 1.3400 ▼
- GBP/EUR: 1.1700 - 1.1820 ▲
- GBP/AUD: 2.0620 - 2.0820 ▲
- EUR/USD: 1.1220 - 1.1370 ▼