Home Daily Commentaries Dollar weakens despite Powell rate warning

Dollar weakens despite Powell rate warning

Daily Currency Update

GBP/USD has regained the 1.20 level overnight as comments from US Federal Reserve Chairman, Jay Powell helped weaken the dollar across the board. In a discussion at the Economic Club in Washington DC, the Fed Chairman indicated that rates could peak a little higher than previously thought due to the tight labor market and resilient economy. Despite the upbeat comments which could have helped strengthen the dollar markets seemed to focus on the message that inflation is on a downward trajectory and the US economy could possibly still avoid a recession, a so-called "soft landing" should this come to fruition. From the UK there has been little data of note in the past 24 hours meaning Powell's comments have been the main mover of the direction of the pound. GBP/USD is just under 1.21 with GBP/EUR around 1.1250.

Key Movers

With Jay Powell's comments indicating the Fed may be looking at economic data more closely given the strength of the labor market, we could see a little more movement on tomorrow’s lunchtimes Unemployment Claims from the US. Today it is a quiet docket except for an interview with New York Federal Reserve Chairman John Williams which is scheduled for 2:15 pm. Like the US it is pretty quiet from the eurozone today with no top data due. Tomorrow we have the EU's quarterly Economic Forecasts which should paint a more optimistic picture compared to last November’s edition. EUR/USD whipsawed on Powell's comments however then saw the euro rally pushing up from around 1.0680 to now sit at 1.0750.

Expected Ranges

  • GBP/USD: 1.2000 - 1.2140 ▲
  • GBP/EUR: 1.1180 - 1.1300 ▲
  • GBP/AUD: 1.7245 - 1.7400 ▼
  • EUR/USD: 1.0670 - 1.0800 ▲