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Market Overview
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Markets are quiet today with little data to drive direction. The USD stays weak as falling yields boost bets on Fed rate cuts, now seen as a 30% chance for three this year. GBP/EUR and GBP/AUD are both rebounding from recent lows, while risk sentiment remains steady despite mixed signals from US airstrike reports.
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GBP
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GBP climbed to its highest level in several years against the USD, supported largely by the USD’s broad decline following Powell’s comments. The shift in Fed rhetoric gave GBP/USD the momentum needed to break through key resistance levels, despite a relatively quiet domestic data calendar in the UK.
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USD
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The USD faced renewed headwinds after Fed Chair Jerome Powell struck a more flexible tone on future monetary policy, a notable shift from the restrained, wait-and-see approach he emphasized during the previous week’s Fed meeting. This softer stance sparked speculation of earlier-than-expected rate cuts. Meanwhile, consumer sentiment in the US deteriorated in June, as ongoing worries about the economic fallout from trade tariffs and employment prospects undermined confidence.
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EUR
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The EUR also saw strong upward momentum, hitting multi-year peaks versus the USD. As with GBP, the EUR benefited from the USD’s retreat amid growing expectations of a more dovish Fed. The move was driven more by external developments than any immediate changes in the Eurozone’s own economic outlook.
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CAD
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Canadian inflation data showed headline CPI remaining flat, while core readings eased marginally. Despite the softer core measures, the overall inflation profile is not expected to alter the Bank of Canada’s current trajectory significantly. For now, markets continue to see the BoC in a holding pattern, with no urgent pressure to act on rates.
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On the currency front, GBP/EUR is staging a modest recovery after dipping to its lowest level in two months, creating an opportunity for EUR sellers to capitalize. Meanwhile, GBP/AUD has bounced off recent lows, retracing back to levels last seen in April.
With a near-empty economic calendar, markets are likely to drift today in the absence of major data releases. The USD remains under pressure in early trading, weighed down by declining Treasury yields. Traders are now factoring in roughly a 30% probability that the Federal Reserve could implement three rate cuts before year-end.
Despite geopolitical tensions, investor sentiment has held steady. This comes after US military airstrikes reportedly failed to damage underground nuclear infrastructure — claims that have been publicly denied by the White House.
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HOW WE CAN HELP
Our experienced currency team is here to ensure you make the most of your international transfers. By gaining a clear understanding of your goals, we offer personalised support and recommend the most suitable strategies to help you navigate the currency market with confidence. Get in touch with Osman Hanif today on +44 (0) 20 3371 9200 or email osman@magnafinancial.com
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