War of words

Yesterday's currency recap

USD fell to its weakest level in almost four years, weighed down by a sharp rebounding JPY, mounting concerns over a potential US government shutdown, and a broader loss of confidence in US assets. Adding to the pressure, US consumer confidence dropped to its lowest reading since 2014, further undermining the currency’s appeal. JPY's strength intensified on renewed intervention rhetoric from Japanese officials, dragging USDJPY to its lowest since November. Broad Greenback weakness pushed EURUSD and GBPUSD to their strongest levels since 2021.

Today's GBP rates

Key data points

What we think

Markets head into Wednesday with the USD on the back foot after Trump signalled comfort with a weaker dollar, reinforcing downside pressure. ECB officials have pushed back on recent euro strength, warning it could weigh on inflation and competitiveness, raising the prospect of a policy response. The key focus now is tonight’s FOMC, where the Fed is expected to hold rates. Any dovish tilt would further entrench the sell-USD narrative.

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