Home Daily Commentaries Markets await Fed Chairman Jay Powell testimony

Markets await Fed Chairman Jay Powell testimony

Jake Trask
Written by
Jake Trask

Jake Trask

OFXpert

Based in London, Jake boasts a rich and extensive career in the foreign exchange industry, spanning 15 years.

| Tuesday 9 July, 2024

Daily Currency Update

The week started positively for the pound, which rose across the board as markets responded favourably to the new Labour government's first full week in power. With no significant data released on Monday, the expectation of stability under Prime Minister Keir Starmer likely contributed to the pound's steady increase. This calm appealed to both domestic and international investors.

Additionally, comments from Bank of England Monetary Policy Committee member Jonathan Haskel, speaking at King's College London, provided further support. Haskel suggested that the BoE should maintain current interest rates at its August meeting due to the UK's persistent tight labour market. Despite this, markets are still anticipating a roughly 65% chance of a rate cut on August 1st.

As of this morning, the pound has slightly retraced but remains strong, with GBP/USD holding above 1.28 and GBP/EUR rising to 1.1835.

Key Movers

Looking ahead, today's key event is the first of two days of testimony from Federal Reserve Chairman Jay Powell. Twice a year, the head of the Fed discusses the economy and monetary policy with lawmakers in Washington, making any hints about the future direction of US interest rates particularly significant for investors. Although the Fed is expected to start loosening monetary policy in September, there is considerable data to consider before then. The next important data point is Thursday's CPI reading, anticipated to fall to 3.1% from 3.3% year-over-year.

Markets have also reacted positively to the defeat of the Far-Right Rassemblement National in the French elections. However, the National Assembly is now highly fragmented, with the far-right, President Emmanuel Macron's centrist party, and the far-left led by Jean-Luc Mélenchon holding 143, 168, and 182 seats, respectively, out of 577. This political deadlock may hinder the passage of legislation and could create a headwind for the euro. Currently, EUR/USD is holding steady around 1.0820.

Expected Ranges

  • GBP/USD: 1.2720 - 1.2900 ▲
  • GBP/EUR: 1.1765 - 1.1865 ▲
  • GBP/AUD: 1.8900 - 1.9070 ▼
  • EUR/USD: 1.0750 - 1.0880 ▼

Written by

Jake Trask

OFXpert

As a Senior Corporate Client Manager, Jake and his team manage a diverse portfolio of 250 businesses to meet their varied foreign exchange needs. He enjoys untangling the complexities of foreign exchange dynamics, constantly striving to provide clients with the most informed insights and strategies to navigate these fluctuations successfully.