22/06 – Powell speech crucial for path of currencies

22/06 – Powell speech crucial for path of currencies

GBP: Waiting on Thursday

EUR: Europe is not the US

USD: Powell to speak this afternoon


Sterling managed to recover slightly yesterday, mainly powered by the slight dollar sell-off. As noted yesterday, the main release for the pound this week is the Bank of England meeting on Thursday. Expectations remain that the BOE will continue its recent guidance that further progress in jobs markets are needed before they will feel comfortable to raise interest rates. This will make wages and household savings data all the more important moving forward.

For now, as long as the data surrounding the UK economy remains strong, and the delta variant of Covid-19 is under some level of control, the longer-term outlook for sterling is strong. Much like the weather, and the prospects for our football team, the skies are a little grey currently.


The divergence between comments from the Federal Reserve and those from the European Central Bank will become more and more stark as time goes on but ECB members have a chance to further show their hand later today in speeches at 15.00 and 18.30 BST.

For now we expect EURUSD to remain around the 1.1850 mark with GBPEUR back towards 1.17.

US dollar

The dollar unwound some of its strength yesterday as language from Fed members was not as hawkish as the rhetoric seen in the days following the Fed meeting. Comments such as “The low-rate and low inflation era is not ending anytime soon” suggest that while the Federal Reserve has told the market that they are ready to start talking about tapering asset purchases, the talk may last a long time.

Chair Powell speaks later today although his pre-prepared remarks suggest that there is nothing in his appearance that will add to the current levels of volatility.


Oil prices are a little stronger this morning, helping commodity currencies and the wider risk environment improve. We will need to see prices break above $75 a barrel for dollar weakness to come back to the fore, however.

Market rates

Today’s interbank rates at 08:24 against sterling. Movement vs yesterday.

Euro€1.167 ↑
US dollar$1.389 ↑
Australian dollar$1.849 ↑
South African randR19.83 ↑
Japanese yen¥153.3 ↑

Have a great day.

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Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.