Spectrum FX Daily Report

GBP: The British Pound held steady against the U.S. Dollar and the Euro yesterday, having rebounded from seven-week lows against the greenback it hit at the start of the week. However, BoE Governor Andrew Bailey has recently commented that, with further encouraging signs indicating a cooling inflation trend, the UK economy is progressing towards a point where the central bank could initiate interest rate cuts.

EUR: The Euro racked up gains against the U.S. Dollar yesterday but faces a tricky path to further upside as ECB members continue to lay out the carpet for a rate cut as soon as June. In fact, the most recent economic data suggests that the trend of slowing inflation seen earlier this year has persisted. Euro area inflation fell to 2.4% from 2.6% in March, the lowest level since the start of the Russia-Ukraine war in February 2022.

USD: The U.S. Dollar traded below recent peaks this morning as investors waited on this week's labour data to guide the interest rate outlook. In fact, an unexpected slowdown in U.S. services growth had knocked the dollar lower yesterday. Nevertheless, for the year so far it remains the best-performing G10 currency as rate cut expectations have been dialled back dramatically over the last few months.

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