GBP/USD Drops to 1 week low after Carney Comments

In today’s fundamental analysis: The dollar reached a more than three-week high versus the yen this Tuesday, after an influential Federal Reserve (Fed) official said U.S. inflation should rise alongside wages, reinforcing expectations for the Fed to keep raising interest rates. Not many economic data and events are scheduled for today and all with low to medium volatility risks associated. However, it is important to note the Brexit talks resumed yesterday and the headlines have already picked up on power play between the UK and EU. 

Fundamental Analysis

• Against a basket of six major currencies, the US dollar (DXY) rose to as high as 97.609 at one point on Tuesday, its highest level since May 30. The dollar index last traded at 97.51.

• Sterling held steady at $1.2740, ahead of speeches by Bank of England (BOE) Governor Mark Carney and British Finance Minister Philip Hammond later on Tuesday. Breaking: Sterling falls half a percent after Carney says now not the time to raise rates. GBP/USD dropped to a 1 week low at 1.2759.

• Oil prices flirted with this year’s lows as market players saw more signs that rising crude production in the United States, Libya and Nigeria were undercutting the Organization of Petroleum Exporting Countries (OPEC)-led efforts to support the market with output curbs.

• Gold prices pared gains as markets looked toward further Fed rate hikes and, at some point, a move to tighten conditions by the European Central Bank (ECB). Other precious metals prices were also lower overnight.