The Federal Reserve kept their interest rates unchanged in yesterday’s meeting, bringing a pause to cuts after a series of continuous cuts towards the end of 2025. Fed Chair Jerome Powell noted that policymakers would need greater confidence that inflation was moving closer to their 2% target.
Powell’s decision to keep rates on hold this time around provides more evidence of a central bank which is increasingly cautious but also internally divided on what the path for rate decisions look like. Aside from this, markets are still expecting the Federal Reserve to keep rates unchanged in the near term but to see through two interest rate cuts later this year.
Although The U.S kept rates unchanged, the Dollar continued its losses as speculation continues to question whether there is a threat to The Federal Reserve’s independence. Trump has opened a criminal investigation into Powell over a long-running renovation of the central bank’s buildings and so far has yet to respond or comply with the investigation.
At the turn of the hour, we have Euro-Zone Consumer Confidence and Business Sentiment for January which are both expected to show a slight improvement potentially providing some further support for The Euro.
For those clients exposed to Japanese Yen conversions, we have their January Inflation figures due out just prior to Midnight with figures currently suggesting a slight drop in prices from 2.3% to 2.2%. If figures come out as expected, we could see a bit of relief for The Yen especially with current commentary seemingly debating a currency intervention from The Bank of Japan.
GBP/EUR 1.1535 GBP/USD 1.3802 GBP/AED 5.0719
GBP/AUD 1.9554 GBP/CHF 1.0589 GBP/CAD 1.8667
GBP/NZD 2.2720 EUR/USD 1.1948 GBP/ZAR 21.7156