Powell says “considerable progress” made in fight against inflation
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Daily Currency Update
The Chairman of the US Federal Reserve, Jay Powell, began two days of testimony before lawmakers in Washington yesterday stating that the Fed had made “considerable progress” in bringing inflation back to its 2% target. Although he warned of the risks of cutting rates too soon, its looking more likely that the Fed will start reducing borrowing costs at its September 18th policy decision. The dollar strengthened a touch on the news however market attention is clearly focused on the latest inflation data due on Thursday lunchtime. The latest Consumer Price Index reading is expected to slip back to 3.1% from 3.3% y/y and should this come to fruition (or it undershoot) then the chances of a September cut will increase. Powell speaks again today in Washington in what is an otherwise quiet day on the data front. EUR/USD continues to trade a little above 1.08.Key Movers
Political paralysis continues in France with none of the main parties any closer to being able to form a government following France’s snap election called last month by President Macron. The deadlock will likely continue to be a headwind for the euro until the impasse is resolved. The next major data of note from the UK is tomorrow mornings first estimate of GDP for May. Growth of 0.2% is expected m/m after grinding to a halt in April. As mentioned before this weeks main event is tomorrow lunchtimes US CPI reading which could cause some volatility should it deviate much from the forecast figure. GBP/USD has slipped to 1.2795 with GBP/EUR holding steady at 1.1825.Expected Ranges
- GBP/USD: 1.2735 - 1.2860 ▼
- GBP/EUR: 1.1770 - 1.1860 ▼
- GBP/AUD: 1.8915 - 1.9060 ▼
- EUR/USD: 1.0760 - 1.0880 ▼