Fed signals likely September rate cuts
Daily Currency Update
British producer output price inflation climbed to a two-year high of 1.9% in June, up from 1.3% in May, according to preliminary official data. This increase adds to the growing signs of inflationary pressures within the British economy. The Office for National Statistics (ONS) had suspended the publication of Producer Price Index (PPI) data in March after identifying calculation errors dating back to 2020. The figures released on Wednesday are interim data ahead of the regular PPI publication, which is scheduled to resume in October.Key Movers
The US Federal Reserve is indicating a high probability of further rate cuts at the September meeting, with an 88% chance priced in by the markets. Investors are also awaiting today’s preliminary quarterly GDP data, which will shed light on the current state of economic growth. Additionally, unemployment claims are being released, providing important insights into the health of the labour market.Tomorrow, the Core PCE Price Index month-over-month will be released, serving as the Federal Reserve’s primary measure of inflation. This closely watched indicator often influences the central bank’s decisions, as rising inflation typically leads to interest rate hikes to fulfil its inflation containment mandate. Consequently, movements in the Core PCE can have a significant impact on currency valuations and broader financial markets.
Expected Ranges
- GBP/USD: 1.3431 - 1.3525 ▲
- GBP/EUR: 1.1574 - 1.1612 ▲
- GBP/AUD: 2.0571 - 2.0653 ▲
- EUR/USD: 1.1570 - 1.1680 ▲