Daily Currency Update

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Markets on edge after Federal Reserve comments and slow global recovery

GBP - British Pound

The pound received some support this week after inflation figures for June came in over expectation at 2.5%. This came after an initial short decline due to weak UK employment data. This news may have triggered a change in the thinking of Bank of England officials, with some suggesting a sooner than expected tapering of assets purchases. Both inflation and growth surpassed the central bank’s forecast for May which could have prompted this shift in mood.

GBP/USD saw some volatility off the back of this news, hitting session highs of 1.3895 after the comments of the Bank of England policy makers. GBP/EUR also pushed up to 1.1748 after these comments before consolidating at around 1.17 towards the end of the day.

Key Movers

Yesterday we saw Fed Chair Jerome Powell express some concerns around the US labour market, with fewer participants in the workforce since the start of the COVID-19 pandemic. Powell then further fuelled concerns in the market, stating that they still may not start to consider tapering of bond buying in the near future. We saw the dollar push lower against several other currencies after these comments.

EUR/USD strengthened through Wednesday and the early part of Thursday peaking at 1.1849 prior to the US inflation figures. However, since the release of the data we saw the pair drop back down and just about hold around the 1.1800 handle where it is still sat currently.

Expected Ranges

GBP/USD: 1.3825 - 1.3875 ▼

GBP/EUR: 1.1695 - 1.1745 ▲

EUR/USD: 1.1795 - 1.1820 ▲

GBP/AUD: 1.8585 - 1.1865 ▼