Forex News
- USD/JPY attracts some sellers and erodes a part of Tuesday’s gains to over a one-week top.
- The US-Iran ceasefire extension undermines the USD and exerts some pressure on the pair.
- Hormuz risks and delayed BoJ rate hike bets cap gains for the JPY and support spot prices.
The USD/JPY pair adds to its modest intraday losses and moves further away from over a one-week high, around the 159.70 region, touched the previous day. Spot prices drop to the 159.00 neighborhood, or a fresh daily low, during the early European session, though the downside potential seems limited.
A temporary extension of the US-Iran ceasefire prompts some selling around the US Dollar (USD) and exerts some downward pressure on the USD/JPY pair. However, economic concerns stemming from a standoff over the Strait of Hormuz, along with bets for a delayed Bank of Japan (BoJ) rate hike, might continue to undermine the Japanese Yen (JPY) and help limit losses for the currency pair.
The USD/JPY pair shows some resilience below the 23.6% Fibonacci retracement level of the recent move up from last week's swing low, around the 157.60 region, and bounced off the 100-period Exponential Moving Average (EMA) on the 1-hour chart. That said, the Moving Average Convergence Divergence (MACD) has slipped marginally below zero, and the Relative Strength Index (RSI) near 48 signals neutral to slightly soft momentum.
Momentum indicators, in turn, hint that the upside impetus is fading but not yet undermining the broader intraday support near the 23.6% Fibo. retracement at 159.15, reinforced by the 100-period EMA at 159.07 just beneath. A deeper pullback would expose the 38.2% retracement at 158.85, followed by layered Fibonacci supports at 158.60, 158.36, and 158.01, with the 157.57 swing low acting as a more distant structural floor if selling pressure accelerates.
(The technical analysis of this story was written with the help of an AI tool.)
USD/JPY 1-hour chart
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
DBS Group Research economist Chang Wei Liang notes that while oil climbing toward $100 on stalled Iran-US talks has supported the US Dollar, this rebound will be capped by low conflict risks. Furthermore, the analyst predicts that despite Fed Chair nominee Kevin Warsh's emphasis on central bank independence, his belief in AI's disinflationary impact could lean him toward rate cuts, keeping the Dollar's upside in check.
USD rebound seen capped by Fed outlook
"Iran surprised markets by refusing to attend a second round of talks with the US in Pakistan, resulting in oil prices rallying towards US$100, and the USD trading broadly higher."
"Volatility in markets is likely to pick up as both sides look to strengthen their leverage for negotiations, but any USD rebound should be restrained as a re-escalation into conflict remains unlikely for now."
"Fed Chair nominee Warsh has affirmed that he believes in the importance of an independent Fed at his confirmation hearing overnight. He stated that he has made no promises to Trump on lowering interest rates, while seeking to enact major reforms to the central bank, including a new framework for dealing with inflation."
"Still, Warsh is likely to favour rate cuts now as he holds a belief that AI should dampen inflation due to productivity gains, and this could keep a check on the USD."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- NZD/USD strengthens to around 0.5915 in Wednesday’s early European session.
- Trump announced an indefinite extension of a ceasefire with Iran.
- Hotter New Zealand’s inflation report has fueled speculation that the RBNZ may need to raise interest rates sooner than expected.
The NZD/USD pair gathers strength to near 0.5915 during the early European session on Wednesday. The New Zealand Dollar (NZD) edges higher against the US Dollar (USD) after US President Donald Trump says the US is extending the ceasefire with Iran at Pakistan's request.
Trump said on Tuesday that the US is extending the ceasefire with Iran at Pakistan’s request as he waits for a unified proposal from Iran. A White House official confirmed in a statement that US Vice President JD Vance’s trip to Pakistan would not take place on Tuesday.
Traders will closely monitor the developments surrounding a second round of truce talks with Iran. Any signs of prolonged conflict between two countries or in the Middle East could boost a safe-haven currency such as the Greenback and create a headwind for the pair in the near term.
New Zealand's annual inflation rate remained steady at 3.1% in the first quarter (Q1) of 2026, exceeding market expectations of 2.9%. Analysts at Kiwibank and Westpac suggest that persistent sticky domestic inflation may force the Reserve Bank of New Zealand (RBNZ) to maintain a restrictive policy stance for longer than previously anticipated.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- Oil prices pull back to $87.50 but remain within the previous days' ranges.
- The market has broadly overlooked Trump's announcement of an indefinite ceasefire in Iran.
- The ongoing blockade of the Strait of Hormuz keeps WTI prices steady near $90.
Crude prices edged lower on Wednesday following US President Donald Trump's unilaterally announced extension of the ceasefire on Tuesday. The barrel of the US benchmark West Texas Intermediate (WTI) has pulled back to $87.50 ahead of Wednesday’s European session opening, from $91.60 highs on Tuesday, but remains within the last few days’ range.
Trump said on Tuesday that the ceasefire deadline will be prolonged until negotiations with Iran conclude, but the peace talks, which were supposed to have restarted on Tuesday, remain stalled. US Vice President JD Vance cancelled his trip to Pakistan, and Tehran has not yet decided whether to send a delegation for a new round of talks this week.
Meanwhile, the US military keeps its grip on the Strait of Hormuz. Iranian Foreign Minister Abbas Araghchi affirmed that blockading Iranian ports is “an act of war” and a “violation of the ceasefire”, and some voices from Tehran have called to “take the initiative” against the US.
In this context, WTI prices remain broadly steady near the $90 level, enhancing an energy shock that is tipping the global economy to the brink of stagflation.
Data from the American Petroleum Institute (API) released on Tuesday showed that US Crude Oil inventories dropped by 4.4 million barrels in the week of April 17. These figures beat expectations of a 1 million decline, and highlight a strong demand for Oil, which contributes to keeping prices buoyed at high levels.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
MUFG's Senior Currency Analyst Lloyd Chan notes that stalled US–Iran talks and an extended United States (US) ceasefire have shifted the conflict into a prolonged standoff, with a continued blockade of Iranian ports. This implies ongoing disruption risks to energy flows through the Strait of Hormuz. Brent for June delivery remains elevated near USD100, while broader macro markets, including US Dollar Index (DXY) and US yields, stay relatively contained.
Geopolitics keep Brent elevated
"A second round of US–Iran talks failed to materialize after Tehran rejected further peace discussions, following an initial high level engagement that did not yield any resolution to the conflict. President Trump has unilaterally extended his ceasefire timeline, keeping a temporary truce in place until talks with Iran are formally concluded."
"Meanwhile, the US continues to blockade Iranian ports to halt oil shipments. The conflict appears to have moved into a prolonged standoff rather than towards a swift or durable resolution, with US leveraging the port blockade to pressure Tehran into a peace deal, or risk further military escalation."
"For markets, this environment implies continued disruption to energy flows through the Strait of Hormuz. Brent crude for June delivery remains elevated, hovering near the USD100/bbl level. However, broader macro markets remain relatively contained, with DXY steady around 98.4 and the US 10-year Treasury yield holding near 4.3%."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
The United Kingdom (UK) headline Consumer Price Index (CPI) rose 3.3% over the year in March, compared to a rise of 3.0% in February, the data released by the Office for National Statistics (ONS) showed on Wednesday.
Markets predicted a 3.3% growth in the reported period. The UK inflation reading was well above the Bank of England’s (BoE) 2% inflation target.
The core CPI (excluding volatile food and energy items) climbed 3.1% year-over-year (YoY) in the same period, compared to February’s 3.2% print and came in below the forecast of 3.2%.
Meanwhile, the monthly UK CPI arrived at 0.7% in March versus a rise of 0.4% reported in February, above the market consensus.
GBP/USD reaction to the UK CPI inflation data
The UK CPI inflation data fails to boost the Pound Sterling (GBP). At the time of writing, the GBP/USD pair is trading 0.08% higher on the day to trade at 1.3518.
Pound Sterling Price Last 7 Days
The table below shows the percentage change of British Pound (GBP) against listed major currencies last 7 days. British Pound was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.40% | 0.39% | 0.29% | -0.80% | -0.70% | -0.27% | -0.16% | |
| EUR | -0.40% | -0.05% | -0.13% | -1.21% | -1.02% | -0.66% | -0.57% | |
| GBP | -0.39% | 0.05% | -0.15% | -1.16% | -0.96% | -0.59% | -0.52% | |
| JPY | -0.29% | 0.13% | 0.15% | -1.09% | -0.92% | -0.54% | -0.41% | |
| CAD | 0.80% | 1.21% | 1.16% | 1.09% | 0.16% | 0.55% | 0.65% | |
| AUD | 0.70% | 1.02% | 0.96% | 0.92% | -0.16% | 0.34% | 0.43% | |
| NZD | 0.27% | 0.66% | 0.59% | 0.54% | -0.55% | -0.34% | 0.11% | |
| CHF | 0.16% | 0.57% | 0.52% | 0.41% | -0.65% | -0.43% | -0.11% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
This section below was published at 05:24 GMT as a preview of the UK Consumer Price Index (CPI) inflation data.
- The United Kingdom’s Office for National Statistics will publish the March CPI data on Wednesday.
- The annual UK headline inflation is set to pick up in March, while growth in core CPI is seen stabilizing.
- The UK CPI data could trigger a big reaction in the Pound Sterling amid receding BoE interest rate hike bets.
The United Kingdom (UK) Office for National Statistics (ONS) will publish the high-impact Consumer Price Index (CPI) data for March at 06:00 GMT.
The report could significantly alter market expectations about a Bank of England (BoE) interest rate hike later this year, ramping up volatility around the Pound Sterling (GBP), as traders brace for the impact of the energy shock from the Middle East war.
What to expect from the next UK inflation report?
The UK Consumer Price Index is expected to rise 3.3% year-over-year (YoY) in March, following a 3% increase in February. The reading is likely to come in above the BoE’s projection of 3%, moving further away from its 2% target.
Core CPI inflation, which excludes energy, food, alcohol, and tobacco prices, is expected to hold steady at 3.2% YoY in the reported period.
According to industry experts, official data is expected to show that service inflation remained stable at 4.3% YoY in March.
Meanwhile, the British monthly CPI is seen rising by 0.6% in the same period after a 0.4% growth in February.
"We expect headline inflation to rise to 3.3% year-over-year from 3.0%, driven by the energy supply shock, while core inflation is expected to hold at 3.2%, matching February and in line with consensus expectations. This would mark a significant reversal in the progress toward disinflation seen in the U.K. through February and is likely to persist for several months, “ Wells Fargo said in a research note ahead of the data release.
How will the UK Consumer Price Index report affect GBP/USD?
It’s the inflation print that covers the first monthly period data after the United States (US) and Israel launched airstrikes on Iran in late February, prompting retaliatory strikes by the Iranian Republic and leading to higher energy costs, particularly for Oil. Therefore, an uptick in headline British inflation, both monthly and annual, is well anticipated.
However, markets may consider this a one-off, as what would matter the most for the BoE when deciding on interest rates are the so-called second-round effects on core inflation from the war impact.
Speaking on the energy shock-led inflationary pressures, in a speech on April 14, BoE policymaker Megan Greene said that “we won't have definitive evidence of second-round effects for a while, it could take months.”
She further noted that “we can't just look through negative supply shocks; the view needs to be more nuanced.”
“The swaps curve has slashed BoE rate hike bets over the next twelve months from as much as 100 basis points (bps) on March 26 to 25 bps currently. BoE rate hike bets should ease further given excess slack in the economy. The BoE estimates a negative output gap of -1% of GDP in 2026,” BBH Analysts noted.
The latest labor data published by the Office for National Statistics (ONS) showed annual growth in regular earnings, excluding bonuses, slowed less than expected to 3.6% in the three months to February from 3.8% previously, while the Unemployment Rate unexpectedly fell to 4.9% in the three months to February, from 5.2% in January, and lower than estimates of 5.2%.
With signs of stabilization in the UK labor market and higher inflation projections, the March CPI data will be critical to keeping bets alive for a BoE rate hike this year.
A surprise uptick in the core CPI and services inflation could double down on hawkish BoE expectations. In such a case, the Pound Sterling will receive the much-needed lift, driving GBP/USD back toward the 1.3600 barrier. Conversely, an unexpected slowdown in core readings could push back against BoE rate hike bets, weighing negatively on the pair.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for the major and explains: “GBP/USD is defending the triple top breakout resistance-turned-support near 1.3485, with the 14-day Relative Strength Index (RSI) momentum indicator holding well above the 50 level.”
“The pair needs acceptance above the 1.3600 round level to break the consolidative mode, paving the way toward the 1.3700 threshold. The next topside target is aligned at the February high of 1.3732. On the flip side, the immediate support is seen near 1.3485, below which the 1.3415 area could challenge bullish commitments. That zone is the confluence of the 50-day Simple Moving Average (SMA) and the 200-day SMA. Further down, the 21-day SMA at 1.3384 will be the level to beat for sellers,” Dhwani adds.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- Silver price jumps to near $78.50 as the oil price retraces after the US-Iran ceasefire extension.
- Washington to hold attacks against Iran until it receives a unified proposal.
- Fed’s Chairman Warsh expresses preference for a smaller balance sheet.
Silver price (XAG/USD) trades 2.3% higher to near $78.50 during the early European trade on Wednesday. The white metal strengthens as oil prices have corrected, following United States (US) President Donald Trump’s announcement of a ceasefire extension with Iran before the expiration of the two-week ceasefire on April 22.
WTI Oil price trades 2.3% lower at around $87.60, as of writing, after a significant jump to near $91.60 on Tuesday.
Since the start of the war between the US and Iran, the relationship between the Silver price and the oil price has remained inverse, as rising energy prices led to a sharp increase in inflation expectations globally. This scenario discourages central banks from slashing interest rates, which is unfavorable for non-yielding assets, such as Silver.
Late Tuesday, US President Trump announced, through a post on Truth.Social, the military department will hold attacks on Iran until Washington receives a unified proposal from Tehran. However, Trump clarified that the US blockade of Iranian sea ports would remain intact.
In the US, Kevin Warsh was officially announced as the new Federal Reserve (Fed) chairman on Tuesday. Warsh expressed the need to bring fundamental policy reforms in his testimony before the Senate Banking Committee and a preference for a smaller balance sheet.
Meanwhile, a slight downtick in the US Dollar (USD) due to the US-Iran ceasefire extension is also supporting the Silver price. Technically, a lower US Dollar makes the Silver price a favorable risk-reward bet for investors.
At the press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.13% lower to near 98.27.
Silver technical analysis
XAG/USD trades higher at around $78.50 as of writing. The metal reflects a neutral near-term bias amid an Ascending Triangle chart formation on a daily timeframe. The pair wobbles around the 20-period Exponential Moving Average (EMA), which is at $77.00, for over a month, reflecting a sideways trend.
The Relative Strength Index (RSI) remains inside the 40.00-60.00 zone, demonstrating indecisiveness among market participants.
On the topside, initial resistance is defined by the horizontal resistance of the above-mentioned chart pattern around $81.33, where a clear break would open the way to a stronger bullish extension toward the March 12 high of $87.45.
Looking down, immediate support is seen at the rising trend line around $78.34, with the 20-period EMA at $77.00 providing an additional dynamic floor. A daily close below $77 would weaken the current bullish bias and expose deeper retracements, where the psychological level of $70 will be the key support zone.
(The technical analysis of this story was written with the help of an AI tool.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Commerzbank’s Michael Pfister argues that the extended ceasefire with Iran and ongoing closure of the Strait of Hormuz keep global inflation risks elevated, even if EUR/USD does not currently reflect this. He notes that renewed tensions would likely support the US Dollar (USD) more than a deal would lift the Euro (EUR), and that political noise around the Federal Reserve (Fed) and Kevin Warsh means US Dollar issues will persist.
Ceasefire, Hormuz risk and Fed politics
"A few hours ago, the US president announced that he was extending the ceasefire with Iran until the negotiations were concluded. "
"For now, however, the uncertainty continues. As long as the Strait of Hormuz remains closed, the risk of global inflation remains high and the situation is highly volatile. Even if EUR/USD does not currently reflect this: Should tensions escalate again and a deal become less likely, the US dollar is likely to benefit once more."
"Therefore, at present, the risks appear to be asymmetrically distributed. Since EUR/USD is already close to pre-war levels, any euphoria in the event of a deal is likely to be limited, while if hostilities were to flare up again, the exchange rate would likely drop significantly."
"Away from the events in the Middle East, Kevin Warsh, Trump’s nominee to succeed as Fed Chair, had his confirmation hearing yesterday. He did not announce anything new, despite making an effort to emphasise the Fed’s independence."
"However, the US president seems to see things differently, having made it clear in a recent interview that he would be disappointed if Warsh did not lower interest rates immediately upon his appointment. In addition, the Justice Department’s investigation into the Fed’s renovation costs is ongoing, despite critical senators now calling for a congressional inquiry."
"This could be a way to ensure Warsh’s confirmation proceeds as planned. Therefore, even if the war were to end, it is unlikely that we would run out of issues surrounding the US dollar anytime soon."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The Pound Sterling faces slight offers against its peers after the UK CPI data release.
- The UK headline CPI rose as expected by 3.3% YoY in March, while core and services inflation cooled.
- Investors await the flash UK S&P Global PMI and the Retail Sales data.
The Pound Sterling (GBP) faces slight selling pressure against its major currency peers after the release of the United Kingdom (UK) Consumer Price Index (CPI) data for March. The British currency drops to near 1.3518 against the US Dollar (USD), but still holds little gains.
The Office for National Statistics (ONS) has reported that the headline inflation accelerated to 3.3% Year-on-Year (YoY), as expected, from 3% in February. The core CPI – which excludes volatile components of food, energy, alcohol, and tobacco – grew at a moderate pace of 3.1% YoY, while it was expected to have risen steadily by 3.2%.
On a monthly basis, the UK headline CPI rose strongly by 0.7% against estimates of 0.6% and the previous reading of 0.4%. Inflation in the services sector, which is closely tracked by Bank of England (BoE) officials, has cooled down to 4.3% from 4.4% in February
While the UK headline inflation was already anticipated to accelerate in the wake of higher energy prices amid Middle East conflicts, lower core and services inflation data are expected to allow BoE officials to leave interest rates unchanged at 3.75% in the policy meeting on April 30.
Investors expect the British currency to trade highly volatile in the remaining week, as the preliminary S&P Global Purchasing Managers' Index (PMI) data for April and the Retail Sales data for March are scheduled to be published on Thursday and Friday, respectively.
On the geopolitical front, United States (US) President Donald Trump has announced a ceasefire extension for an indefinite period.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
