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European currencies were under pressure after Jerome Powell's comments.
The US dollar reversed its losses on Tuesday afternoon after comments from Federal Reserve chair Jerome Powell. The pound and the euro both fell by around half a cent post lunch, having risen slightly in the morning.
In written testimony to US Congress, Powell pushed back on the recent theory that the Fed would cut interest rates in September and November. Acknowledging that progress had been made on inflation, Powell said ‘more good data’ would give policymakers the confidence to act.
An unusually quiet day in currency markets helped his comments reverberate loudly. Powell will give a major speech today in one of the last dates in his diary before he and his colleagues decamp for their annual summer camp in Jackson Hole, Wyoming.
In France, political parties continued to grapple with the power vacuum left by the recent elections. The far left alliance, which became the largest party in parliament, were urged to put tribalism aside and negotiate a deal that would leave room for effective government.
The UK’s new chancellor, Rachel Reeves, has announced that Labour will launch its flagship National Wealth Fund within a week. The £7.3bn scheme became a key part of Labour’s election manifesto, promising to raise billions of private investment to decarbonise the country’s economy and improve infrastructure.
For more information about the seismic shift in Europe’s landscape, look no further than our July to September Quarterly Forecast. Our latest report will be available from Thursday, so be sure to get your copy for all the latest insight from leading banks, plus plenty of extra analysis.
Dyson is set to cut 1000 jobs in the UK as part of a global restructuring — the equivalent of a quarter of its British workforce. The vacuum cleaning manufacturer currently employs 3500 people in the UK, but founder Sir James Dyson has drawn criticism in recent years for moving the company headquarters to Singapore after supporting Brexit.
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GBP: Hitting the ground running
The new Labour government spent a long time making plans for when they entered government. Happily for the pound, this has already translated to the launch of several policies, including the National Wealth Fund. The hope is that this political stability continues and the pound starts to look like a beacon compared to other rival nations.
GBP/USD: the past year
EUR: In need of a boost
After the French election, the last thing the euro needed was to come under pressure from the US. However, Jerome Powell’s comments helped send the euro down yesterday afternoon. A boost is badly needed.
GBP/EUR: the past year
USD: How much data do you want?
The above is a question many in the US would have been asking yesterday. Last week’s jobs data was widely interpreted as the first indisputable proof of economic slowdown. Evidently, this was not enough for Jerome Powell, who continued to advocate for caution on interest rates.
EUR/USD: the past year
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