The pound and the euro are slipping against the dollar Thursday morning as the Fed paved the way for more rate hikes and as Brexit and Italian budget woes continue to plague the pairs.

Fed debates pushing rates higher

FOMC documents released Wednesday revealed that the majority of committee members favored pushing interest rates higher, even above the neutral level.

Fed officials, in their most recent economic outlook, estimated the neutral level at 3%. However, in notes released with the Sept. 25-26 FOMC meeting minutes, a majority of the group expect the rate to be above that level by year-end 2020 and 2021.

The meeting minutes also showed that all members supported the most recent rate hike from 2% to 2.25%. The Fed plans to continue its path of gradual rate increases.

This goes against President Trump’s recent criticism and disapproval of rate hikes.

The dollar benefitted from the news Wednesday, pulling the GBP/USD and EUR/USD pairs lower. EUR/USD hit as low as 1.148 Thursday morning, before spiking briefly. GBP/USD is hovering just below 1.31.

The euro is pressured by Italian budget concerns and Brexit is weighing on the pound.

No deal outcome

Not that this is much of a surprise given the amount of pessimism going into the E.U. summit, but the U.K. and E.U. failed to come to an agreement yesterday.

U.K. Prime Minister Theresa May said she was open to extending the transition period by a few months in order to find a solution for the Irish border backstop.

After little progress was made, the E.U. is now looking to its scheduled December summit as a potential deadline instead of adding a summit in November.

The pound was also hurt this morning by worse-than-expected retail sales for September. Year over year, retail sales grew 3% compared to the 3.6% expected. Retail sales excluding fuel grew 3.2% versus 3.7% estimated. The month-over-month sales declined more than expected.

Not a manipulator

The U.S. Treasury report didn’t call China a currency manipulator, allowing the yuan to fall even lower than its August low.

The move releases some of the pressure the U.S. has been putting on China as of late.

However, the Trump administration is moving forward with moves that it considers level the playing field. Trump wants to remove the U.S. from a postal treaty that gives Chinese companies discounted shipping rates for small packages sent to consumers in other countries.