Sterling remains strong on interest rate predictions
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Daily Currency Update
Following the UK and US bank holidays on Monday, there was little macroeconomic data. The key release came from the US on Tuesday in the form of consumer confidence data, which showed an unexpected rise for the first time in four months. The survey, based on 3,000 US households, indicated that views on business conditions and the labour market were less negative. This supported an increase in the Conference Board’s gauge of sentiment to 102, up from an upwardly revised 97.5 in April. However, the news had little impact on the USD, as market participants remain focused on the European Central Bank's interest rate decision next week and the UK's recent inflation figures, which suggest a delayed interest rate cut.GBP/USD touched but failed to break through, 1.2800 yesterday afternoon. Although a bit lower, the currency pair still sits above 1.2750. GBP/EUR has pushed higher and is just under 1.1780 at the time of writing. EUR/USD has lost some of its gains, falling below 1.0850 this morning.
Key Movers
Data remains sparse today. Australian CPI data was released overnight, showing that inflation pressures remain far above the Reserve Bank of Australia’s target annual rates, with underlying inflation trending flat. This has fueled speculation that the bank's next move is more likely to be an interest rate hike rather than a cut. Despite this news, GBP/AUD and AUD/USD have remained fairly muted in terms of volatility. Later today, the preliminary German CPI month-on-month data is due, with an expected decline from the previous 0.5%.Expected Ranges
- GBP/USD: 1.2720 - 1.2800 ▲
- GBP/EUR: 1.1730 - 1.1790 ▲
- GBP/AUD: 1.9150 - 1.9240 ▲
- EUR/USD: 1.0810 - 1.0880 ▲