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The BoE will announce its interest rate decision as cross-party Brexit talks are edging to an agreement.

Centtrip: Dollar retreats as rate cut looms

The Dollar got a small boost last night as the Federal Open Market Committee (FOMC) announced its latest interest rate decision and Jerome Powell gave a press conference. Analysts were suggesting that the recent drop in inflation data – Personal Consumption Expenditure (PCE) fell from 1.8 per cent in February to 1.6 per cent in March – could lead to the Fed’s chair to signal that the next move in interest rates could be down, rather than up.

Powell described the latest inflation data as “transitory” and “not persistent” and that the Fed would only consider policy moves lower if inflation remained low. He also praised the strength of the labour market, which he said remained “strong and economic activity rose at a solid rate”.

Powell’s comments strengthened the Dollar against the Pound and Euro, which traded 40 and 70 basis points lower, respectively, after the press conference.

Today the Bank of England (BoE) will announce its latest interest rate decision, followed by a press conference with BoE Governor Mark Carney. There is little to no expectation that the Bank will raise rates today, despite inflation continuing to push the 2 per cent target rate. Consumer Price Index (CPI) data for March came in at 1.9 per cent.

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