Spectrum FX Daily Report

GBP: The British Pound eased off this morning after the ONS reported a sharp decline in the Retail Sales data for April. Nevertheless, UK CPI inflation report earlier this week prompted investors to lower their bets on the Bank of England rate cut next month. Ultimately, investors see nearly 50% odds of a first-rate cut in August, and a quarter-point move is not fully priced in until November.

EUR: The Euro lost further ground yesterday as the growing speculation that the ECB will start cutting interest rates exerted some selling pressure on the bloc’s single currency. Moreover, ECB President Christine Lagarde said that she is "really confident" that Eurozone inflation was under control and an interest-rate cut is probable next month.

USD: The U.S. Dollar reached a 10-day high this week, rallying against a basket of currencies, as the minutes of the Federal Reserve’s late-April meeting, coupled with several hawkish comments from Fed officials, saw investors grow more wary of sticky inflation. Consequently, investors have largely priced out expectations for an interest rate cut in September.

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