Focus now leads to UK inflation data next week
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Daily Currency Update
UK inflation is now in focus and is expected to continue its downward trend for May's report, mirroring the recent moderation seen in US inflation. This would bring the UK closer to its 2% target, with a particular focus on the anticipated decline in services sector inflation.In April, services inflation remained elevated at 5.9% and wage growth was robust at 5.7%. These factors prevented the Bank of England (BoE) from adopting a dovish stance in May, leading markets to delay their expectations for the timing of the first Bank Rate cut. Traders are closely watching these indicators to gauge the future direction of BoE policy.
Key Movers
The US dollar recovered against a basket of currencies on Thursday, overcoming a soft US producer price inflation report for May, following the Federal Reserve's hawkish stance on Wednesday.A softer-than-expected US Consumer Price Index (CPI) report for May which had initially triggered a sharp sell-off in the USD. Despite this, the Fed's hawkish tone provided support to the dollar, offsetting the impact of the weak inflation data.
Expected Ranges
- GBP/USD: 1.2685 - 1.2765 ▲
- GBP/EUR: 1.1865 - 1.1905 ▲
- GBP/AUD: 1.9205 - 1.9285 ▲
- EUR/USD: 1.0655 - 1.0735 ▼