The US Dollar sell-off continues to weigh heavy on the currency with both GBP and EUR reaching 5-year highs against The Dollar. This continued weakness has come off the back of Donald Trump initially stepping back from his tariff threats on European Countries earlier this week, but also the outrage over two American Citizens being fatally shot by Immigration agents in Minnesota. The backdrop of this has seen The Democrat Party withdraw its support for the funding bill for Homeland Security and has now brought renewed risk of another US Government shutdown next month.
Continued tensions both in The US and abroad have made many investors wary of the US Dollar and due to the growing instability politically.
Keeping with The U.S, we have their eagerly anticipated interest rate decision this evening. The Central Bank is widely expected to keep interest rates on hold so the comments from Chair Jerome Powell will be of huge importance, as will the potential timing of future rate cuts this year. Additionally, with Jerome Powell’s term ending in May, Trump stated yesterday he will announce his pick for the new Federal Reserve head soon.
Keeping on the topic of Central Banks, The Bank of Canada also have their first-rate meeting of 2026 this afternoon. Expectations suggest they will also keep their rates unchanged, however with a mixed bag of economic data, especially with the unemployment sector facing troubling times, an interest rate cut may well be on the cards sooner than we think. Any comments on potential timings of rate cuts in the coming months could see The Canadian Dollar weaken.
GBP/EUR 1.1490 GBP/USD 1.3777 GBP/AED 5.0622
GBP/AUD 1.9676 GBP/CHF 1.0569 GBP/CAD 1.8686
GBP/NZD 2.2833 EUR/USD 1.1975 GBP/ZAR 21.9117