Good morning,
The pound strengthened across the board early on in yesterday’s session, however the dollar fought back with strength. This was caused by comments by U.S. Federal Reserve Chair Jerome Powell that opened the door for the central bank to take a more aggressive monetary policy path.
Analysts are keeping a keen eye on indications of future interest rate hikes from the US. The dollar had been fluctuating between slight gains and losses earlier in the day, and weakened slightly after comments from Atlanta Federal Reserve Bank President Raphael Bostic. Bostic said he sees six rate hikes this year and two for 2023, a more dovish stance than most of his colleagues as he has concerns about the effects of the conflict between Russia and Ukraine on the U.S. economy.
However, this was quickly offset when the dollar gained ground after Powell said the central bank must move “expeditiously” to bring too-high inflation under control, and will, if needed, use bigger-than-usual interest rate hikes to do so. Powell said the central bank is prepared to raise interest rates by a half percentage-point at its next meeting if needed, deploying a more aggressive tone toward curbing inflation than he used just a few days earlier.
Have a great day.
Author: William Jones, Senior Relationship Manager.
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