By Noam Bennaiche
The US Dollar is trading slightly softer today, continuing to drift within April’s established range, as geopolitical uncertainty and a firmly on-hold Federal Reserve leave it without a clear directional catalyst and the Dollar retains underlying support. However, the gradual unwinding of Iran-related risk premium is limiting gains. Risks could strengthen the dollar if geopolitical tensions escalate, but for now markets remain in wait-and-see mode.
The Pound has gained modest support this week following Tuesday’s UK CPI release. Headline inflation rose from 3.0% to 3.3% in March, matching expectations, while core inflation eased slightly. Flash services PMI, closely watched by the Bank of England, accelerated from 50.5 to 52.0, highlighting persistent domestic pressures and keeping the prospect of a rate hike later this year alive.
This stickiness in services helped push GBP/EUR higher, as markets reassessed the relative policy outlooks of the BoE and ECB. The Euro lacked fresh drivers and struggled to hold ground. Meanwhile, GBP/USD remains broadly stable.
With a light economic calendar today, sentiment should remain driven by broader macro themes and developments around Iran. The next key event for Sterling is the Bank of England’s May meeting, where services inflation will be a central focus. This morning retail sales came out stronger – 0.7% instead of -0.6%
Overall, Sterling retains a modest upside bias against the Euro as long as UK inflation supports a relatively tighter BoE stance. If you have any upcoming transfers, speak to a member of our team and make your money go further.
Today’s key data
USD – Revised Consumer Sentiment at 3:00 pm