We’re in interest rate season and the US Federal Reserve goes today, with a 25-basis point cut widely expected. Any deviation from that is likely to hit the dollar one way or another.
It follows a stonking US employment report yesterday, with 430,000 new jobs added. With today’s cut generally priced in, all the talk is of who will replace Jerome Powell as chair of the Fed, with final interviews for the job this week.
The Bank of England’s governor Andrew Bailey will also be quizzed today, with the BoE’s own quarter-point rate cut expected next week but still far from baked in. There was further evidence of a slow economy yesterday with the British Retail Consortium (BRC) reporting like-for-like sales rising by just 1.2%, the most sluggish rise for six months.
It’s been a quiet few days for data but that all ramps up over the next week, with GDP, unemployment and inflation for the UK all being released in the run up to the BoE’s interest rate decision.
There is increasing speculation about the future of the prime minister, with one alarming report today about the likely negative effect on sterling of a left-wing replacement such as Angela Rayner, should the situation in the first half of 2026 and the elections in May not develop necessarily to his advantage.
Yesterday 13 Labour MPs voted in support of a Liberal Democrat bill that would require the government to begin negotiations on joining a bespoke customs union with the EU. This is highly unlikely to become law, although it did pass the first stage.
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