Exchange Rate News: US Dollar Rallies as Fed Hints Latest Rate Cut May be the Last, for Now

Pound (GBP) Struggles as Inflation Misses

The Pound (GBP) was left in the doldrums yesterday as the UK’s consumer price index printed below expectations last month, revealing inflation fell to just 1.7%, the slowest pace of price growth since 2016.

Also limiting Sterling’s appeal were warnings from the EU that the risks of a no-deal Brexit are ‘palpable’.

Coming up today we have the Bank of England’s (BoE) latest rate decision.

However, with no policy changes expected from the bank this month, the BoE may be overshadowed by the Supreme Court’s ruling on whether Boris Johnson’s proroguing of government was unlawful.

GBP/EUR Exchange Rate Jumps as USD Strengthens

The Pound Euro (GBP/EUR) exchange rate was left on the back foot through most of Wednesday’s trading session in spite of the Eurozone’s own lacklustre inflation reading.

However, the Euro was forced to give ground later in the evening as a stronger US Dollar disproportionately impacted the single currency.

Looking ahead the only notable Eurozone event on the data calendar today will be a speech by the ECB’s Benoît Cœuré, with EUR investors looking for any insights he may provide on the bank’s recent stimulus decision.

GBP/USD Exchange Rate Steady Following Fed Rate Cut

The Pound to US Dollar (GBP/USD) exchange rate remained mostly rangebound yesterday in spite of the Federal Reserve’s rate decision strengthening the ‘Greenback’ against most of its other peers.

While the Fed voted to cut rates again this month, the language of its accompanying statement suggested that there was little appetite for further cuts this year, sending USD exchange rates higher.

The US Dollar may come under pressure later this afternoon, with US housing data expected to show a decline in existing homes sales in July.

GBP/CAD Exchange Rate Steady as Canadian Inflation Also Underperforms

The Pound to Canadian Dollar (GBP/CAD) exchange rate traded in a narrow range on Wednesday as markets reacted to Canada’s own CPI figures.

These showed inflation undershot expectations last month, with core inflation coming in at 1.9% against forecasts for a rise to 2.2%.

GBP/AUD Exchange Rate Surges on Worrying Australian Jobs Report

The Pound to Australian Dollar (GBP/AUD) exchange rate raced to a new three-month high overnight on Wednesday in response to the publication of Australia’s August employment report.

The release showed that unemployment struck a 12-month high last month, with a sizable slump in full-time positions, prompting speculation the Reserve Bank of Australia (RBA) is likely to opt for another rate cut in October.

GBP/NZD Exchange Rate Steady as NZ GDP Beats Expectations

The Pound to New Zealand Dollar (GBP/NZD) exchange rate remained in a narrow range overnight on Wednesday, with the ‘Kiwi’ able to stave off further losses after domestic GDP printed at 0.5% in the second quarter, defying expectations growth would have slipped to 0.4%.

Data Releases

09:30 GBP Retail Sales (Aug)

11: EUR ECB Coeure Speech

12:00 GBP BoE Rate Decision

13:30 CAD ADP Employment Change (Aug)

15:00 USD Existing Home Sales (Jul)


Matthew Andrews

Contact Matthew Andrews