The USD remained on the backfoot yesterday, as markets continued to price the 25bp cut today.
EUR rose to its highest levels since 2021 against USD. Dovish Fed expectations and weaker US yields contributed to this move.
Average earnings came in line with market expectations at 4.7%, remaining above CPI. GBP net-gained against USD, and lost ground to the EUR.
*Daily move - against G10 rates on 16.09.25
** Indicative rates - interbank rates on 16.09.25
As expected, UK CPI came in at 3.8% this morning. This is having a relatively muted impact on GBP and cements expectations that the Bank of England will keep interest rates at 4% tomorrow, with stubborn price growth expected to halt further rate cuts.
Eyes today will turn towards the US and Canada, where expectations are that interest rates will be lowered by 0.25% in both countries. With the US, the focus is very much on whether Powell will imply more aggressive easing this year or retain his restrained approach. His post-meeting comments alongside the dot plot will be closely scrutinised by the markets. We therefore are expecting USD volatility, and it may be sensible to hedge or place market orders before this evening.
Read more about upcoming events here:
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