Investing.com — Sterling and the euro found tentative footing on Thursday, as stabilising risk sentiment allowed both currencies to breathe, even as hotter-than-expected US data kept the dollar firmly supported.
As of 09:08 ET (13:08 GMT), GBP/USD edged higher at 1.3178, up 0.08%, while EUR/USD was down 0.05% at 1.1353.
The dollar paused its rally as equity markets calmed, but the reprieve looked fragile after the Fed’s preferred inflation gauge came in firmer than hoped.
Core PCE rose 0.3% for the month and 3.4% annually, its highest since October 2023, while the headline rate hit 4.1%, its loftiest since April 2023, with Iran war-related energy pressures continuing to filter through the economy.
Consumer spending and personal income both rose a stronger-than-forecast 0.7%, leaving little room for any dovish pivot narrative. ING had flagged risks of a softer 0.2% core print that could dampen hawkish repricing, the firmer actual read dashed that hope.
ING’s Francesco Pesole cautioned it remains too early to rule out another leg higher in the greenback, with any renewed AI jitters a potential catalyst for fresh safe-haven demand.
Dovish-leaning Fed speakers Bowman and Williams are due later and may offer some pushback, though the data gives them little cover.
For sterling, easing political uncertainty, Andy Burnham emerging as Labour leadership frontrunner following Keir Starmer’s resignation, offered modest support, though weak domestic data capped any meaningful cable recovery.
The euro steadied, with ING noting further equity stabilisation could allow a slow drift back towards 1.140.
A firmer German IFO yesterday partially offset Tuesday’s poor PMIs, while ECB speakers maintained a hawkish tone relative to Lagarde’s Monday speech.
ING’s baseline remains that EUR/USD holds above 1.130, though that hinges on sentiment continuing to settle.
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