Key Headlines:

• USD Likely to Stay Strong: Market expectations remain firm as the Fed maintains its current stance.
• BoC Rate Cut Anticipated: A 25 basis point cut from the Bank of Canada is widely expected.

Recap

The USD remained strong yesterday, supported by Donald Trump's remarks advocating for universal tariffs at rates significantly higher than 2.5%. Meanwhile, Australian CPI data came in below expectations, reinforcing market projections for rate cuts totalling 85 basis points this year, which weighed on the AUD.

Today’s Rates

Today's Interbank Rates at 09:23 am against GBP movement.

GBP>EUR – 1.1936

GBP>USD – 1.2430

EUR>GBP – 0.8377

EUR>USD – 1.0412

GBP>CAD – 1.7934

GBP>AUD – 1.9941

GBP>SEK – 13.686

GBP>AED – 4.5642

GBP>HKD – 9.6820

GBP>ZAR – 23.226

GBP>CHF – 1.1258

GBP>PLN – 5.0212

Today’s Key Takeaways

Fed Decision in Focus:

-The Fed is expected to hold rates steady at 4.50% while maintaining a cautious approach to future moves.

-Fed Chair Powell is anticipated to assert the central bank's independence despite Trump's calls for rate cuts.

-Hawkish comments may reduce market expectations to 25bp cuts this year, down from the current 50bp forecast.

Bank of Canada Rate Decision:

-A 25bp rate cut is widely expected this afternoon.

-Market attention will shift to Governor Macklem's forward guidance, particularly regarding potential impacts from US tariffs on Canada.

-A dovish tone may lead to further rate cuts being priced in and likely weaken the CAD, with markets currently factoring in 66bp worth of cuts for the year.

29th January 2025

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