The British pound declined in European trading on Thursday against a basket of global currencies, extending its losses for a fourth consecutive session against the US dollar and hitting a four-week low. The move comes as investors continue to favor the US currency after the Federal Reserve meeting minutes showed that policymakers are not rushing toward interest rate cuts.

UK consumer price data showed continued easing in inflationary pressures on policymakers at the Bank of England, which increased expectations for a UK interest rate cut in March.

Price Overview

• British pound exchange rate today: The pound fell 0.1% against the dollar to $1.3480, the lowest level since January 22, from an opening level of $1.3494, recording a session high of $1.3502.

• The pound lost 0.55% against the dollar on Wednesday, marking its third consecutive daily loss, pressured by UK inflation data.

US Dollar

The dollar index rose 0.1% on Thursday, extending gains for a fourth straight session and reaching a two-week high at 97.78 points, reflecting continued strength of the US currency against a basket of global currencies.

Minutes from the latest Federal Reserve meeting, held on January 27–28, showed divisions among policymakers regarding the appropriate path for US interest rates. The minutes indicated that the incoming Fed chair, expected to take office in May, may face challenges in pushing through any rate cuts.

The minutes also showed that some members expect productivity gains to help ease inflationary pressures, while “most participants” warned that the path toward lower inflation may be slow and uneven. Some members even hinted at the possibility of raising interest rates again if inflation remains above target.

Following the minutes, and according to the CME FedWatch tool, market pricing for keeping US interest rates unchanged at the March meeting rose from 90% to 95%, while expectations for a 25-basis-point rate cut dropped from 10% to 5%.

UK Interest Rates

• Data released on Wednesday in the UK showed headline consumer inflation rising 3.0% in January, in line with market expectations, marking the lowest reading in the past ten months, down from 3.4% in December. Core inflation also eased to 3.1% from 3.2%.

• These figures indicate continued easing of inflationary pressures on policymakers at the Bank of England.

• Following the data, pricing for a 25-basis-point rate cut by the Bank of England in March increased from 85% to 90%.

The Japanese yen declined in Asian trading on Thursday against a basket of major and minor currencies, deepening its losses for a second consecutive session against the US dollar and touching a one-week low. The move came as investors continued to favor the US currency after the Federal Reserve meeting minutes showed that policymakers are in no rush to move toward interest rate cuts.

US President Donald Trump announced projects worth $36 billion as the first round of investments under Japan’s pledge to invest $550 billion in the United States within the framework of the latest trade agreement between the two countries.

Price Overview

• Japanese yen exchange rate today: The dollar rose against the yen by 0.35% to ¥155.29, the highest level since February 10, from an opening level of ¥154.76. The pair recorded a session low at ¥154.62.

• The yen ended Wednesday’s session down 1.0% against the dollar, marking its second loss in three days, pressured by the Federal Reserve minutes.

US Dollar

The dollar index rose 0.1% on Thursday, extending gains for a fourth straight session and hitting a two-week high at 97.78 points, reflecting continued strength of the US currency against a basket of global currencies.

Minutes from the latest Federal Reserve meeting, held on January 27–28, showed divisions among policymakers regarding the appropriate path for US interest rates. The minutes also indicated that the incoming Fed chair, expected to take office in May, could face challenges in pushing through any rate cuts.

The minutes further revealed that some members expect productivity gains to help ease inflationary pressures, while “most participants” warned that the path toward lower inflation may be slow and uneven. Some even hinted at the possibility of raising interest rates again if inflation remains above target.

Following the minutes, and according to the CME FedWatch tool, pricing for keeping US interest rates unchanged at the March meeting rose from 90% to 95%, while expectations for a 25-basis-point rate cut fell from 10% to 5%.

Investment Spending

The administration of President Donald Trump announced the launch of $36 billion worth of projects, representing the first tranche of Japan’s pledged $550 billion investment package in the United States.

The move aims to strengthen economic cooperation between the two countries and support Japanese investment in strategic sectors within the US market.

Views and Analysis

• Chris Turner, Head of Global Research at ING, said that Japanese direct investment into the United States will be a key factor to watch this year, adding complexity to the already mixed outlook for the dollar/yen pair.

• Turner added that the key question for currency markets is whether these investments will generate dollar-supportive flows or whether Japan will rely on its foreign exchange reserves to back new dollar loans and avoid pressure on the yen, noting that the latter appears to be Tokyo’s preferred outcome.

Japanese Interest Rates

• Market pricing for a quarter-point rate hike by the Bank of Japan at its March meeting remains below 10%.

• Pricing for a quarter-point hike at the April meeting is currently around 50%.

• According to the latest Reuters poll, the Bank of Japan may raise rates to 1% by September.

• Investors are awaiting further data on inflation, employment, and wages in Japan to reassess these expectations.

Oil prices climbed more than 4% during Wednesday’s trading session, amid mounting concerns over the potential outbreak of a conflict between the United States and Iran.

Two days of peace talks in Geneva between Russia and Ukraine ended with little progress, as Ukrainian President Volodymyr Zelensky accused Moscow of obstructing US-led efforts to end the war.

The US government announced that Iran had failed to meet its key demands outlined during the nuclear negotiations.

US Vice President J.D. Vance stated that President Donald Trump retains the right to use force if diplomacy fails to halt Iran’s nuclear program.

In trading, April Brent crude futures rose 4.35%, or $2.93, to settle at $70.35 per barrel.

Meanwhile, March US Nymex crude futures gained 4.59%, or $2.86, to close at $65.19 per barrel.

The minutes of the US Federal Reserve’s January meeting revealed divisions among officials regarding the future path of interest rates, as they indicated that further cuts could be paused for now, with the possibility of resuming later this year if the inflation trajectory allows.

Although the decision to keep the benchmark interest rate unchanged received relatively broad support, the road ahead appeared less clear, with members split between prioritizing the fight against inflation and supporting the labor market, according to the minutes released Wednesday for the January 27–28 meeting.

The meeting summary stated: “In considering the outlook for monetary policy, a number of participants remarked that further reductions in the target range for the federal funds rate would likely be appropriate if inflation continued to move lower in line with their expectations.”

However, participants differed over the appropriate policy direction, debating whether greater emphasis should be placed on curbing inflation or on supporting the labor market.

The minutes added: “Some participants indicated that it would likely be appropriate to maintain the policy rate at its current level for some time while the Committee carefully assesses incoming data, and several judged that additional monetary easing might not be warranted until there is clearer evidence that the disinflation process has resumed on a firm footing.”

Some officials also discussed the possibility of raising rates again and called for the post-meeting statement to reflect a “two-sided description of future policy decisions.”

Such language would reflect “the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation were to remain above target.”

The Federal Reserve had previously lowered its benchmark borrowing rate by three-quarters of a percentage point through three consecutive cuts in September, October, and December, bringing the main rate into a range between 3.5% and 3.75%.

This meeting marked the first under a new voting configuration of regional bank presidents, including Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack, both of whom have publicly stated that the Fed should keep policy unchanged for an extended period, arguing that inflation remains an ongoing threat and should remain the central focus. All governors and the 19 regional bank presidents participate in meetings, but only 12 hold voting rights.

With ideological divisions already present within the Committee, the split could deepen if former governor Kevin Warsh is confirmed as the next Fed Chair. Warsh has expressed support for rate cuts, a stance also shared by current governors Steven Miran and Christopher Waller. Both Waller and Miran dissented at the January meeting, favoring an additional quarter-point cut. Current Chair Jerome Powell’s term is set to expire in May.

The minutes do not identify participants by name, instead using descriptions such as “some,” “a few,” and “many,” and included two rare references to an “overwhelming majority” to characterize certain views.

Overall, participants expected inflation to decline over the course of the year, “although the pace and timing of that decline remained uncertain.” They also discussed the impact of tariffs on prices, anticipating that such effects would gradually fade as the year progresses.

The minutes stated: “Most participants cautioned that progress toward the Committee’s 2% objective could be slower and more uneven than generally expected, and viewed the risk of inflation remaining above target for longer as significant.”

During the meeting, the Federal Open Market Committee adjusted some language in its statement, noting that risks related to inflation and the labor market had become more balanced, softening earlier concerns about employment conditions.

Since the meeting, labor market data have been mixed, with indications of further slowing in private-sector job creation, and limited growth largely concentrated in the healthcare sector. Nevertheless, the unemployment rate declined to 4.3% in January, while nonfarm payroll growth came in stronger than expected.

On the inflation front, the personal consumption expenditures index — the Fed’s preferred gauge — has remained stuck near 3%. However, a report released last week showed that the consumer price index, excluding food and energy, fell to its lowest level in nearly five years.

Futures traders currently see June as the most likely timing for the next rate cut, with the possibility of another reduction in September or October, according to CME Group’s FedWatch tool.