TD Securities strategists report that the US Dollar (USD) experienced only modest weakness following a softer-than-expected US core Consumer Price Index (CPI) print, with core CPI rising 0.2% month-over-month (m/m) compared to the consensus forecast of 0.3% m/m. The headline CPI matched expectations at 0.5% m/m, largely driven by a 7% m/m increase in gasoline prices. Despite the knee-jerk reaction to the core CPI miss, TD Securities maintains that the USD is in a broad-based uptrend, supported by strong payrolls and ongoing geopolitical tensions, particularly related to the US/Iran conflict. They expect the US Dollar Index (DXY) to remain elevated around the 99.86–100.00 level into the upcoming FOMC meeting, where Chair Warsh's guidance is anticipated to be a key driver for the next USD breakout [1].
Meanwhile, Scotiabank analysts Shaun Osborne and Eric Theoret note that the British Pound (GBP) is holding gains against the USD, outperforming most G10 peers except the Canadian Dollar (CAD) and Norwegian Krone (NOK). GBP/USD entered Wednesday’s North American session with a fractional 0.1% gain. Traders are awaiting UK trade and industrial production data, which are among the last major releases before the June 18 Bank of England (BoE) meeting. Rate expectations for the GBP have stalled and yield spreads have stabilized, suggesting limited near-term directional risk. Elevated domestic political risk is noted ahead of the June 18 by-election for potential Labour leader Andy Burnham’s constituency. Technical resistance is seen around the 200-day moving average at 1.3420 and the 50-day moving average at 1.3461, with a near-term trading range expected between 1.3350 and 1.3450. The RSI has returned to the neutral threshold at 50, and recent price action suggests a potential 'morning star' reversal candle [2].
Both sources highlight that while the USD remains supported by strong US economic data and geopolitical factors, the GBP is showing resilience against the USD, buoyed by technical factors and anticipation of upcoming UK economic releases. However, sentiment for GBP has deteriorated somewhat over the past week, and political risk remains elevated [2].
Looking ahead, TD Securities expects Chair Warsh’s forward guidance at the FOMC to be a pivotal moment for the USD, potentially driving the next breakout. Scotiabank analysts are watching for Friday’s UK trade and industrial production figures as key data points ahead of the BoE meeting, with GBP likely to remain range-bound in the near term [1][2].
CONCLUSION
The US Dollar uptrend remains intact despite a softer core CPI, supported by strong payrolls and geopolitical tensions, with the FOMC meeting expected to be a key catalyst. The British Pound is holding gains against the USD, outperforming most G10 peers, but faces stalled rate expectations and elevated political risk ahead of key UK data and the BoE meeting. Market participants are closely watching upcoming central bank guidance and economic releases for further direction.