USD near 5-month high against major currencies
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Daily Currency Update
The US dollar has maintained its position close to a five-month high against major currencies as traders rush to adjust their expectations for the Federal Reserve's first interest rate reduction of the year. The US dollar has hit a new six-week high against the euro, and it is expected to achieve the same against the pound, following unexpected US manufacturing expansion data from Monday.This marks the first growth since September 2022. Currently, markets are predicting a 61% chance of a Fed rate cut in June, which is down from a 70% chance only a week ago.
Key Movers
Despite recent comments by Bank of England Monetary Policy Committee member Catherine Mann, who suggested that markets are pricing in "too many" rate cuts for the current year, there is growing momentum for a rate cut to be implemented at the June meeting of the MPC.Bank of England Governor Andrew Bailey has outlined clear conditions that must be met, suggesting that inflation doesn't necessarily need to have reached the Bank's 2% target before a cut can be considered, thus making a June cut more probable.
Expected Ranges
- GBP/USD: 1.2515 - 1.2575 ▼
- GBP/EUR: 1.1675 - 1.1735 ▲
- EUR/USD: 1.0705 - 1.0755 ▼