Home Daily Commentaries US debt ceiling deal edging closer

US debt ceiling deal edging closer

Daily Currency Update

President Joe Biden and House Speaker Kevin McCarthy compromised on bitterly contested disputes over federal spending and assistance for the poor as part of their debt-limit deal.  They must now sell the agreement to lawmakers from both parties as part of their debt-limit deal.

US Treasury Secretary Janet Yellen said on Friday that the government would default if Congress did not increase the debt ceiling by June 5. The uncertainty around a US government default would likely persist until Congress passes the deal into law and the markets will likely continue to experience more volatility.

Key Movers

Former officials on the Bank of England's monetary policy committee have warned that the BOE may need to raise borrowing costs to as high as 6% to stamp out inflation. That’s above even traders’ expectations for a peak of 5.5% and is precisely why investors are worrying over the economic pain that could eventually result from such a move.

Increasing worry over a recession, fuelled partly by Jeremy Hunt’s comments last week, helped lead the pound to its longest weekly losing streak since December.

Expected Ranges

  • GBP/USD: 1.2395 - 1.2485 ▲
  • GBP/EUR: 1.1555 - 1.1625 ▲
  • EUR/USD: 1.0705 - 1.0775 ▲