FX Market Update: Policy Divergence Keeps USD Supported Against EUR and GBP.
USD – Remains firm following the Fed’s decision to keep rates unchanged, with policymakers maintaining a cautious stance on inflation and future easing.
EUR – Holds relatively steady against the dollar, finding support from signs of division within the Fed and a less hawkish outlook than some investors had anticipated.
GBP – Continues to trade with a softer tone, as markets weigh the Bank of England outlook against a still‑resilient US dollar.
USD: The dollar has stabilised following the initial volatility after the Federal Reserve meeting. While rates were left unchanged, the Fed maintained a cautious tone, supporting the view that policymakers are not yet ready to ease policy aggressively. Markets will now turn their attention to US GDP data and upcoming economic releases for further direction.
EUR: The euro is holding firm against the dollar, supported by the perception that the Fed may be less united on the path for future policy than previously expected. While EUR/USD has seen some improvement, gains remain measured as investors continue to assess the relative outlook for the Eurozone and the United States. Near‑term direction is likely to remain closely tied to incoming US data.
GBP: Sterling remains on the back foot, with GBP/USD struggling to gain traction as the stronger dollar continues to weigh on the pair. Attention is firmly on the upcoming Bank of England decision, with markets looking for clarity on the policy outlook. Against the euro, the pound has also softened, reflecting ongoing caution around UK rate expectations and growth prospects.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 9am BST - EUR | (Germany) – Q2 GDP (QoQ Flash Estimate) | 0.1% | 0.3% |
| 9am BST - EUR | (Germany) – Q2 GDP (YoY Flash Estimate) | 0.6% | 0.5% |
| 9am BST - EUR | (Italy) – Q2 GDP (QoQ Preliminary) | 0.1% | 0.2% |
| 9am BST - EUR | (Italy) – Q2 GDP (YoY Preliminary) | 0.7% | 0.7% |
| 10am BST - EUR | (Eurozone) – Consumer Confidence (Final) | -15.9 | -17.6 |
| 10am BST - EUR | (Eurozone) – Unemployment Rate | 6.2% | 6.2% |
| 10am BST - EUR | (Eurozone) – GDP (QoQ) | 0.2% | 0.1% |
| 10am BST - EUR | (Eurozone) – GDP (YoY) | 0.5% | 0.8% |
| 12pm BST - GBP | (UK) – Bank of England Interest Rate Decision | 3.75% | 3.75% |
| 1pm BST - EUR | (Germany) – CPI (YoY Preliminary) | 2.7% | 2.3% |
| 1pm BST - EUR | (Germany) – Harmonised CPI (YoY Preliminary) | 2.8% | 2.4% |
| 1:30pm BST - USD | (US) – Weekly Jobless Claims | 200K | 187K |
| 1:30pm BST - USD | (US) – GDP Advanced QoQ | 2.1% | 2.0% |
| 1:30pm BST - USD | (US) – Core PCE Inflation MoM | 0.2% | 0.3% |
| 1:30pm BST - USD | (US) – Core PCE Inflation YoY | 3.3% | 3.4% |
| 1:30pm BST - USD | (US) – Personal Consumption MoM | 0.3% | 0.7% |