The US dollar gained last night following the Fed interest rate decision and FOMC meeting, with Chairman Powell raising inflation expectations due to tariffs. This suggests policymakers will want to assess the impact of rising prices on consumer behaviour.
Whilst the Fed's dot plot pencilled in two more rate cuts this year, it was clear Fed members were split in their thoughts for this year, with 10 officials expecting two rate cuts this year and 7 officials foreseeing no rate cuts. The Fed held rates in yesterday's meeting as widely expected.
*Daily move - against G10 rates at 7:00 am, 19.06.25
** Indicative rates - interbank rates at 7:00 am, 19.06.25
Markets have started the day risk averse on reports that the US are preparing for a possible strike on Iran as soon as this weekend. Foreign ministers from UK, Germany and France are reportedly set to hold nuclear talks with Iran in Geneva tomorrow.
All eyes on the Bank of England today and whether we see any dovish tilts from members in light of recent wage and GDP numbers. Following the poor numbers last week, markets shifted their expectations for the next rate cut from November to September and have priced in a 75% chance that a cut could come earlier in August. Although yesterday's UK CPI numbers came in lower than expected, much of this was due to a correction by the ONS following an error in April's numbers. No rate cut is expected in today's meeting.
GBPUSD is currently trading at a one-month low, falling through prior support and opening up the possibility of a further move down.
Read more about the Bank of England's interest rate decisions here - When is the next BoE interest rate decision?
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