The US Dollar has continued its momentum as it hovered near a 13-month high as growing expectations around interest rate hikes by the Federal Reserve continued to climb.
Markets are currently pointing towards a 25 basis-point cut in next month's meeting at 36%, up from 8.5% just one week ago. Even moving towards December's meeting and traders are increasing odds for a 50-basis point hike.
This aggressive repricing follows last Wednesday's review of the Federal Reserve's Summary of Economic Projections proving to be more hawkish than expected. The updated dot plot showed at least half of the central bank committee now leaning towards multiple interest rates hikes this year to bring inflationary pressures down, as the volatile situation in The Middle East continues.
One note of potential positivity for The UK is that Retail Sales for June should be higher than expectations due to the extremely hot weather being experienced in The UK. Over the past week, retailers have reported increased sales of Air Conditioning Units, Fans, Ice Cream Makers and Sun Cream. Sales of fans in particular have increased by nearly 3,000% compared to last week, whilst air conditioning units have seen growth of 330%. Electric fans were up by 100% across the previous four weeks, with Cool Bags up by over 250%.
CLICK HERE for more currency market news.
