US inflation expected to rise in June with tariff-driven price hikes
Daily Currency Update
The Bank of England has relaxed capital requirements for medium-sized banks by increasing the asset threshold for mandatory issuance of Minimum Requirement for Own Funds and Eligible Liabilities (MREL) debt. This measure is part of broader reforms intended to enhance the resilience of the UK financial sector by enabling the resolution of failing banks through bail-in mechanisms, thereby minimising the need for taxpayer-funded interventions as witnessed during the 2008 financial crisis.Key Movers
- Inflation Uptick Expected: The U.S. Consumer Price Index (CPI) is projected to rise 0.3% in June, with core CPI (excluding food and energy) also forecasted to increase 0.3%, marking a 3.0% year-over-year gain.
- Tariff Impact Emerging: June may signal the beginning of tariff-driven inflation, particularly affecting goods sensitive to trade policies.
- Fed Policy Implications: After several months of soft inflation (Feb–May), this potential uptick is likely to reinforce the Federal Reserve's cautious stance on resuming interest rate cuts, despite political pressure to lower rates.
- Fuel & Tariffs as Key Drivers: A rebound in gasoline prices and tariff-influenced cost increases are expected to contribute to the CPI rise.
Implication: Businesses should prepare for possible cost increases and delayed monetary easing, especially in sectors exposed to trade tariffs or energy price volatility.
Expected Ranges
- GBP/USD: 1.3375 - 1.3450 ▼
- GBP/EUR: 1.1450 - 1.1510 ▼
- GBP/AUD: 2.0490 - 2.0545 ▼
- EUR/USD: 1.1610 - 1.1695 ▲