The calm before the data storm? The US dollar stays strong as traders brace for Friday’s inflation print, while sterling slips on growing UK rate-cut speculation.
Key Insights:
- A calm market day with attention shifting toward Friday’s developments.
Market Recap:
The US dollar remained broadly stable as investors await Friday’s postponed US inflation release, seen as the final major input ahead of next week’s Federal Reserve decision. Current market expectations continue to reflect a fully priced-in 25bps rate cut, although there is caution that CPI could surprise to the upside.
In the UK, sterling underperformed after inflation data came in unchanged at 3.8%, counter to expectations for a decline. The unexpected persistence in price growth has prompted renewed speculation that the Bank of England may move toward a rate cut before the end of the year.
Today's Market Watch:
The US dollar remains in demand ahead of Friday’s CPI release, as traders’ position for the possibility of stronger inflation data. With sentiment skewed toward buying on any dips, the greenback continues to benefit from expectations of a resilient US economic backdrop.
In contrast, sterling faces downside pressure. Softer UK economic signals and rising confidence in a Bank of England rate cut have weighed on GBP. Attention now turns to Friday’s UK retail sales and PMI figures, which will offer a clearer picture of domestic economic momentum. A disappointing set of data is likely to reinforce rate-cut expectations and could further weaken the pound.
23rd October 2025
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