MARKET REPORT
Sterling Steadies as Markets Eye Geopolitical Developments and Key Data
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- USD extends four-day decline to lowest since early March
- Yen remains under pressure
- US CPI data looms large for G10 currencies
Recap
USD extended its decline for a fourth consecutive session, closing at its lowest level since early March as Trump expressed optimism ahead of this weekend's US-Iran negotiations. Most G10 currencies advanced against the dollar, with GBPUSD edging up 0.15% to 1.3410. The notable exception was JPY, which continued to underperform amid rising domestic inflationary pressures. Overnight, Japanese Finance Minister Katayama warned of increasing speculative activity in FX markets, reiterating readiness to take bold action – a signal markets will not be ignoring.Today
Market rates
*Daily move - against G10 rates as of 5pm BST on 09.04.26
** Indicative rates - interbank rates as of 5pm BST on 09.4.26
Data points
Click here for a calendar of upcoming economic events Our thoughts
Today is all about US inflation. Markets are bracing for a significant jump in March CPI, with consensus pointing to a headline monthly rise of 0.9% – the largest single-month gain since mid-2022 – which would push the annual rate to 3.4% from 2.4%. Core CPI is also expected to accelerate. A hot print would complicate the Fed's position considerably, given sustained energy prices above $90 per barrel, and would likely provide a meaningful boost to USD after four days of losses. This is the number to watch today.
German CPI is expected to confirm the preliminary 2.7% annual reading, offering little fresh impetus for EUR. University of Michigan sentiment also prints, with the prior at 53.3 already reflecting deep consumer pessimism – any further deterioration would add to concerns about the US consumer.
Beyond today's data, this weekend's US-Iran negotiations are the dominant risk event for FX markets. A successful agreement would likely trigger further USD weakness as haven demand unwinds and oil retreats, whilst any breakdown in talks would quickly reverse the recent G10 gains against the dollar. JPYremains particularly vulnerable given Japan's energy import dependency and rising domestic inflation – official warnings of intervention will keep that pair on edge. With CPI printing this afternoon and weekend negotiations looming, volatility is unlikely to ease into the close.
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