Markets buoyant on 'trade deals'

Yesterday's currency recap

USD remained soft throughout yesterday's trading session following on from Trump's comments that he is considering naming an early replacement for Jerome Powell. EURUSD had its longest winning streak in nearly a year and GBPUSD its best run on a monthly basis since early 2021.

Bank of England (BoE) Governor Bailey was on the wires yesterday as well commenting that “uncertainties about structural changes in [the] world economy have impacted FX” and when it came to the economy, that "short-term pick up in inflation introduces some further uncertainty in recent months, evidence that slack is opening up has strengthened; especially in the labour market” – hinting at the threat of potential stagflation.

Today's GBP rates

Key data points

What we think

News overnight revealed that the US and China finalised a trade truce agreement has kept markets in a buoyant mood going into the end of the week. Core PCEnumbers this afternoon will dictate whether this dollar slide continues and if market pricing firms up for three expected rate cuts by the Federal Reserve (Fed) this year. If existing levels are breached, then we could well see GBPUSD and EURUSD test the 2021 highs.

Read more about the Federal Reserve's interest rate decisions here:

• When is the next Fed interest rate decision?
• When is the next FOMC meeting?

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