Pound Gains Momentum, Dollar Holds Firm, Euro Shows Signs of Improvement.

  • Pound Sterling (GBP) gained slightly against Euro (EUR) and U.S. Dollar (USD) after UK inflation data release.
  • GBP/USD traded at 1.2440, up from 1.2420, while GBP/EUR stood at 1.1720, compared to 1.1700 previously.
  • Federal Reserve officials reinforced expectation of sustained elevated interest rates, pushing back market expectations for rate cuts to September.
  • Euro strengthened on positive economic sentiment indicators from Germany and Eurozone, despite subdued current economic conditions.
  • Commodity currencies weakened, with Canadian Dollar under pressure due to a slowdown in core inflation measures.

GBP: Pound Sterling (GBP) saw a slight uptick against both the Euro (EUR) and the U.S. Dollar (USD) following the release of UK inflation data. While the Pound edged higher, market movements remained cautious amid dominating global factors. GBP/USD traded around 1.2440, slightly up from 1.2420, while GBP/EUR stood at 1.1720, compared to 1.1700 previously. The inflation data, showing a slight decrease in the year-on-year rate, may temper expectations of an imminent Bank of England rate cut.

USD: The US dollar maintained its position as Federal Reserve officials reiterated the need for sustained elevated interest rates to tackle inflation. Fed Chair Jerome Powell and other policymakers emphasized a cautious approach, resisting market expectations of rate cuts. This stance reset market pricing, pushing back expectations for rate cuts to September.

EUR: The Euro strengthened across the board, buoyed by positive economic sentiment indicators from Germany and the Eurozone. Despite the improvement, the Eurozone’s current economic situation remains subdued, suggesting that the Euro’s rise may be corrective rather than a reversal. Sterling also showed strength, disregarding an uptick in UK unemployment, as focus remains on persistent wage inflation. Meanwhile, commodity currencies weakened, with the Canadian Dollar facing selling pressure due to a slowdown in core inflation measures. The Dollar, while strong against commodity currencies and the Yen, showed signs of weakening against European counterparts.

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.