Will the US dollar bounce back?

Daily Currency Update

GBP/USD had a remarkable week, achieving a market rate above 1.31, a milestone not seen since April 2022. Meanwhile, the US dollar experienced downward pressure as the Producer Price Index (PPI) data in the US showed a modest 0.1% yearly increase in June, following a 0.9% rise in May. This reflects a widespread weakness in the US dollar, as evidenced by the US Dollar Index's decline of over 2% throughout last week.

Signs that the pace of inflation is slowing in the United States, alongside doubts surrounding the US Federal Reserve's ability to increase interest rates beyond July, are expected to maintain some US dollar weakness in the short term.

However, there is potential for the currency to strengthen later in the year. If concerns about a US recession intensify towards the end of the year, investor demand for the safe-haven US dollar may increase and its value strengthen.