The US dollar was able to reverse some of its recent losses on Tuesday, following comments from the Chair of the Federal Reserve.
Meanwhile, the pound is broadly rangebound so far this morning, with GBP/EUR muted at €1.1822 and GBP/USD stable at $1.2791. GBP/CAD is flat at CA$1.7438, while GBP/AUD holds steady at AU$1.8969 and GBP/NZD surges to NZ$2.1010.
Coming up, will comments from Bank of England (BoE) policymaker Huw Pill infuse some volatility into the pound today?
What’s been happening?
The US dollar initially stumbled yesterday, as a risk-on mood sapped safe-haven demand.
However, USD exchange rates then rebounded later in the afternoon as Federal Reserve Chair Jerome Powell testified before Congress.
Pressed on the Fed’s decision to maintain interest rates at a two-decade high, Powell suggested a rate cut would not be appropriate until the Fed has greater confidence that inflation is returning to target.
In contrast, the pound opened Tuesday on positive footing, before relinquishing ground later in the session. There didn’t appear to be a clear catalyst for this reversal, suggesting it may be attributed to some profit-taking following the UK election.
Meanwhile, trade in the euro remained erratic yesterday as the focus remained on the fallout of the French election and the potential ramifications of a left-led coalition in parliament.
What’s coming up?
Turning to today’s session, the spotlight will be on Bank of England Chief Economist Huw Pill, who is scheduled to deliver a speech later this afternoon.
This will be the first public speech from the Chief Economist since the bank imposed a communications blackout in the run-up to the UK general election so GBP investors will be paying close attention to what he says.
If Pill signals that an August interest rate cut may be on the cards, the pound is likely to tumble.
In the US, Powell’s testimony will continue today, but barring any major bombshells from the Fed Chair any impact on the US dollar may be limited, particularly ahead of the latest domestic inflation figures later in the week.
Finally, in the absence of any notable Eurozone data, will French political jitters continue to influence the direction of the euro?
