August 09, 2025

“The Bank of England lifted sterling yesterday with its hawkish tilt, and the dollar is digesting a new Fed governor and a potential pick for chair. The market will have its eyes on US CPI next Tuesday as the next big data event, alongside a potential meeting between Trump and Putin.”

Sam Cornford – Head of Trading

USD

Trump’s interim appointment of Stephen Miran to the Fed Board got him a third dovish vote on the FOMC yesterday, and current Fed Governor Christopher Waller has now become the frontrunner for the Chair position. Waller is more dovish than Powell but is a relatively good outcome for the dollar – he is well respected in financial circles and would be unlikely to bend to Trump’s demands. While he will be pleasing Trump with his current rhetoric on cutting rates, the long end of the curve would likely remain in check with his nomination.

Yesterday’s data saw continuing jobless claims rise to an almost four-year high, highlighting the troubles in the labour market. The next major piece of data is the US CPI figure for July on Tuesday.

GBP

Sterling gained more than 0.6% against both the euro and the dollar yesterday, after the Bank of England’s vote split skewed much more hawkish than expected. The vote for a 25bp rate cut was won by only a 5-4 margin, with double the number voting for a rate hold than was expected. Policymakers appeared to be far more concerned about the stickiness of inflation, which was revised higher in the forecasts and is now not expected to hit 2% until mid-2027, and few were sounding the alarm over the labour market as some might have thought. It is not entirely clear now that many more cuts will be coming, with only a 70% chance priced in that we get a single cut during the three remaining meetings this year. Chief Economist Pill speaks today, and he’ll give some insight on why he opted to keep rates steady yesterday.

EUR

The news of a Trump-Putin meeting in the near term was good news for the euro, but there is no guarantee that it can hold onto meaningful gains unless there is substantial progress towards a ceasefire. Beyond the Ukraine story, EURUSD is still all about the USD leg. There is little data of note in the eurozone today.

Markets

European stocks have had a solid week this week and are on track for their best gain for nearly three months. Novo Nordisk dragged up the Stoxx 600 and the BoE rate cut helped to lift the FTSE 100 yesterday.

Main Economic Events (All Times CET)

2:30pm: Canada Employment Change

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