USD weakness proving positive for the other major currencies
Daily Currency Update
Sterling surged to $1.3710 - its highest since Jan 2022 - as markets reacted to speculation that Trump may replace the Fed Chair, weakening the US dollar. Strong UK PMI data (Composite at 50.7) also boosted GBP, pushing EUR/GBP below €0.8530.The FTSE 100 slipped 0.5%, with losses in oil and pharma stocks, while defence shares held steady following NATO’s 5% GDP defence-spending push. In the US, the dollar hit a three-year low amid concerns over Fed independence. The Dollar Index fell, with markets pricing in around 64 bps of rate cuts by year-end.
EUR/USD climbed to 1.1628, supported by USD weakness and upbeat Eurozone sentiment. A Reuters poll now sees just one final ECB rate cut in September.
In short: GBP is rallying, the euro is rising on dollar softness, and USD is under pressure from political and monetary headwinds. FX volatility is set to remain high.
Key Movers
In the UK, at 11:00am BST we have BoE Governor Bailey speaks at an event. His tone will be under the microscope for any tilt towards future rate cuts, comments could bolster or bog down sterling and gilts. Over in Europe today we have ECB Vice President Guindos speaks in Frankfurt at 6.30pm, markets will parse insights for clues on inflation management and the timing of any further easing.We have lots of data out today over in the US, out at 12.30pm we have U.S. Q1 GDP (final): Markets expect around +2.4% annualised; any downgrade will likely soften the dollar. Durable Goods Orders for May are expected to show a modest rebound of +0.2%, but any downside surprise could rattle the US dollar. Meanwhile, Initial Jobless Claims for the week ending June 21 will serve as a key indicator of labour market trends. With forecasts around 247,000, the figure could significantly influence market expectations for the Fed’s next move.
Expected Ranges
- GBP/USD: 1.3680 - 1.3776 ▲
- GBP/EUR: 1.1664 - 1.1754 ▲
- GBP/AUD: 2.0978 - 2.1061 ▲
- EUR/USD: 1.1680 - 1.1793 ▲