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US dollar slips from multi-month highs as US GDP disappoints

The past couple of weeks have been characterised by some significant swings in the US dollar as investors repriced their Federal Reserve interest rate expectations.

During this period, we’ve seen GBP/EUR trade between €1.17 and €1.15, while EUR/GBP spiked to £0.86 before settling at £0.85.

At the same time, GBP/USD fell as low as $1.23 before recovering to $1.25, while EUR/USD traded between $1.07 and $1.06.

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Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…

What’s been happening?

Speculation the US Federal Reserve will only deliver a single interest rate cut in 2024, propelled the US dollar to multi-month highs in mid-April. Before a weaker-than-expected US GDP print triggered a selloff.

The pound, in contrast, plunged to multi-month lows, amid speculation the Bank of England (BoE) may start its next easing cycle with a 50bps rate cut in August.

Meanwhile, the euro has faced headwinds as dovish comments from several European Central Bank (ECB) policymakers has reinforced bets for a June interest rate cut from the bank.


What do you need to look out for?

Looking ahead, the immediate focus will be on the Federal Reserve’s rate decision on 1 May. No policy changes are expected but a hawkish outlook from the bank could see the US dollar test new highs.

This will be followed the by BoE’s latest rate decision the following week. Will some mixed forward guidance trigger some volatility in the pound?

Meanwhile, the response to the Eurozone’s latest inflation and GDP figures may provide a boost to the euro, if they help to trim ECB rate cut bets.

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