The dollar ended Wednesday slightly up on the pound and euro, gaining 0.15% on the former and just over 0.2% on the latter. Though there was almost no difference between the pound and euro’s exchange rate at the end of trading.
There have been few data releases for the UK economy this week, although tomorrow will see updated GDP figures. Analysts predict that the numbers will come in low at 0.1% or maybe even flat, which isn’t a good look, especially after a government reshuffle that puts growth at the top of the agenda – even if it would be too soon for the new ministers to have affected change.
Today is going to bring fresh inflation data for the US, potentially showing impact from Trump’s tariffs. A slight rise is expected, but there have been recent dramatic revisions in government data, with the Bureau of Labor Statistics revealing the jobs market is performing much worse than previously stated.
The Federal Reserve is under huge pressure from President Donald Trump to cut interest rates when they meet next week, and the recent job market revisions increases that pressure. However, if inflation is shown to be increasing faster than expected, it may push the Fed to hold interest rates steady for another month.
The European Central Bank is set to announce its interest rate decision today. After getting EU inflation down to its 2% target earlier this year, interest rates have remained steady and low at 2.15%.
However, with a slight rise in inflation last month, the ECB may choose to increase rates again to keep inflation down.
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