Bank of England warns on growth outlook

Yesterday's currency recap

Currency markets changed little yesterday, as a dearth of economic data provided little fresh stimulus for traders. Markets, in general, have become very much desensitised to Trump’s chaotic tariff rollout, as they await final details of trade deals between the EU and China, in particular.

Bank of England Governor Bailey sounded a cautious tone, warning on rising UK government debt and the growth outlook, citing anecdotal evidence that businesses face higher uncertainty and are delaying investment decisions including, capital raising. Interestingly, he also warned that there could be "sharp falls in risky asset prices", which include shares and currencies.

The US dollar traded in a narrow range after minutes from the recent Fed decision continued to show members of the voting committee are still very much anticipating two further interest rate cuts this year.

The ECB once again sounded a cautionary note with regards to the strength of the EUR, citing danger to growth and a possible undershoot of the 2% inflation target.

Read more about the FOMC meeting here - When are the next FOMC minutes released?

Today's GBP rates

Key data points

Today's speeches

• Fed’s Daly, Waller and Musalem.
• ECB’s Cipollone and Escriva
• GBP BoE’s Breeden

What we think

Markets are now largely ignoring Trump tariff headlines as evidenced by US equity indices hitting new all-time highs, with the darling of the market, Nvidia, becoming the first company to hit a $4 trillion market valuation.

With global debt levels rising at an unsustainable level, it comes as no surprise to see central bankers start to sound cautionary warnings over growth and potential borrowing shocks. We expect the final outcome regarding tariffs will become a lot clearer over the coming weeks and only then will markets be truly able to accurately price forward the full impact of Trump’s centrepiece economic policy .

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