By Kian Songra
The Pound climbed to a near four-year high against the US Dollar on Thursday, following breaking news that US President Donald Trump may announce Jerome Powell’s successor as Federal Reserve Chair by October. According to the report, potential candidates to replace Powell include former Fed Governor Kevin Warsh, National Economic Council Director Kevin Hassett, and Treasury Secretary Scott Bessent.
The US Dollar weakened in response, as the uncertainty surrounding the Fed’s leadership introduced confusion among investors, who would now have to interpret statements from both Powell and the anticipated new Chair. In the meantime, Fed Chair Powell revealed to the US Congress that the central bank remains in a wait-and-see mode, as the Board assesses the impact of tariffs on inflation. He said that if it is a one-time jump, then they could begin to reduce interest rates.
To add to the breaking news yesterday, U.S. data showed Initial Jobless Claims fell to 236,000 for the week ending June 21, below both forecasts and the prior 245,000 reading. Meanwhile, Durable Goods Orders surged 16.4% in May, nearly double expectations, driven by strong commercial aircraft demand. However, Q1 2025 GDP was revised lower, showing a -0.5% quarterly contraction, down from the earlier estimate of -0.2%.
Year to date the GBP/USD rates have increased close to 10%. Therefore, any clients with Dollar requirements, should see this as a potential buying opportunity and look at our options to fix rates in advance to take advantage while it lasts.
The British Pound heads into the summer navigating a mix of opposing forces. On one hand, improving investor sentiment could offer some support, while on the other, the UK government’s ongoing struggles with its public finances remain a notable headwind. With the Autumn Budget still some distance away, markets may temporarily turn their attention to broader themes, and Sterling could benefit from a calmer global backdrop—particularly as tensions in the Middle East ease and more clarity emerges around Donald Trump’s stance on tariffs.
However, while a more stable global environment may help keep the GBP/EUR exchange rate trading within familiar ranges, buyers should remain aware that unexpected geo-political or economic shocks could quickly shift sentiment. The outlook is constructive for now, but the potential for volatility remains, and those with upcoming currency requirements may want to consider proactive strategies to manage that risk.
As the month nears an end, today brings very little on the data front, so markets will continue to monitor any changes in the Middle East and ongoing speculation about trade deals. Get in touch with our friendly team of consultants to discuss your options ahead of any upcoming currency requirements.