Markets muted ahead of ECB and CPI

• PPI numbers show the pressure of tariffs on businesses

Yesterday's currency recap

USD was marginally weaker yesterday after lower-than-expected PPI numbers. But as stated, USD gains were at a minimum - diving into the numbers shows evidence that there are tariff pressures on margins between the cost of goods and the charge to the final buyer. Perhaps this is curbing some of the enthusiasm for the number of rate cuts expected by the Fed this year.

Today's GBP rates

Key data points

What we think

Markets anticipate an uptick in consumer prices in today’s CPI release, but with yesterday’s PPI data coming in below expectations, another downside surprise is possible - which could put additional pressure on the USD this afternoon.

No change is expected in the ECB rate decision today and, given the recent hawkish commentary from ECB members, we don’t expect much EUR volatility, unless there are any dovish tones in the ECB statement. Then we should see some EUR weakness as markets increase the odds of future rate cuts.

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