It’s a quiet week ahead for currency market news but Trump is reliably never out of the headlines. It’s another chapter in an ongoing attempt to exert increased influence on the Federal Reserve, threatening the central bank’s independence. We cover this and more in your weekly market update.
Current rates
| Currency pair | Rate |
|---|---|
| eur usd | 1.1624 |
| gbp eur | 1.1580 |
| gbp usd | 1.3465 |
Rates correct as of 10:15am on Monday 26 August but may now have changed.
The Big 3
Three stories covering the latest developments in economies, currencies and borders.
‘You’re Fired’: Trump seeks Fed dominance with Cook firing threat
President Trump has moved to dismiss Federal Reserve governor Lisa Cook, accusing her of falsifying mortgage documents and citing “gross negligence” as cause. No charges have been filed, though the Justice Department is weighing an investigation. Cook has rejected the president’s authority to fire her, calling the move unlawful. The clash threatens Fed independence and could hand Trump a four-seat majority on the Board of Governors if successful, a shift with major implications for US monetary policy.
What would all this (and more) mean for GBP/USD?
Firing Fed members is unprecedented. We want to know what would it mean for the greenback? Well, as an indication, the dollar dipped briefly after President Trump moved to oust Fed governor Lisa Cook, but GBP/USD cut its losses following her refusal to resign. Markets remain alert to risks around central bank independence, with short-term stimulus likely offset by higher inflation expectations over time. Despite political pressure, the dollar has held firm, even with Powell using the Jackson Hole speech last week to signal a possible September rate cut. For GBP/USD, the near-term picture remains tied to rate expectations, though market volumes should pick up again with the end of the summer holiday season (sad though that is…).
UK unemployment rate could rise to 5% according to think tank
In UK news, the FT reported today that UK job risk could be on the rise. Think tank, Resolution Foundation has warned UK joblessness could rise to 5% – the highest it’s been since early 2021. Following Q2 reports, it currently sits at 4.7%. There’s an indication that falling responses to the labour force survey, the main source of unemployment data, has increased the need for this research. Slower hiring has been linked to higher national insurance costs and a rise in the living wage. A weakening labour market adds to the Bank of England’s policy challenge as it balances growth risks with the need to curb price pressures and a stubbornly high inflation rate.
[FT]
Looking forward
It’s a quiet week ahead with no major reports or releases until Thursday. Here’s what’s coming up.
Wednesday: 50% US tariff on imports from India takes effect
Thursday: US report GDP and some jobs data.
Friday: Germany and Japan report inflation data. GDP from a range of other EU countries. US publishes PCE.
Here’s what we’re talking to our clients about
We’re always here to support. Here are some of the conversations we’re having:
- Seasonality of business flows
- The interest rate dot plots until year end
- Where to for the USD next
The contents of this article do not constitute financial advice and are provided for general information purposes only.