Fed set to leave rates on hold and signal September cut
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Daily Currency Update
Today's big event is the US Federal Reserve's interest rate decision due at 7pm BST this evening. No change from the current level of 5.50% is predicted, however it is widely thought that Fed Chairman Jay Powell will signal to markets that its following meeting on September 18th is when policy will begin to be eased. As usual, Powell's press conference will be scrutinised for clues over how many further cuts we can expect to see this year. Powell may also receive some awkward questions on what either a Trump or Harris election victory will mean for monetary policy. There is little data today from the UK so attention on the domestic front will turn to tomorrow's Bank of England interest rate decision where the chances of a rate cut have grown over the past couple of weeks to around 60%. GBP/USD is little changed since Monday and continues to trade around 1.2850. Likewise GBP/EUR continues to trade around 1.1865.Key Movers
This morning sees the first estimate of Eurozone inflation with CPI expected to hold steady at 2.5% y/y. The core reading which strips out food and fuel costs is expected to slip to 2.8% from 2.9% y/y. This afternoon we have the monthly US ADP Non-Farm Employment change data for July followed by Pending Home Sales for June. Further afield the Bank of Japan raised interest rates to 0.25%, their highest level since 2008. BoJ officials will hope this move will stabilise the yen. The move seems to have worked with USD/JPY back to 151, its lowest level since March. EUR/USD continues to hover around 1.0820 unchanged for much of the week so far.Expected Ranges
- GBP/USD: 1.2780 - 1.2900 ▼
- GBP/EUR: 1.1820 - 1.1915 ▼
- GBP/AUD: 1.9645 - 1.9810 ▲
- EUR/USD: 1.0760 - 1.0900 ▼