The British pound edged higher in European markets on Wednesday against a basket of global currencies, holding above its three-week low against the US dollar recorded yesterday, and heading toward its first gain in nine days, supported by active buying from low levels.

Recent comments by Bank of England Governor Andrew Bailey have increased expectations of a UK interest rate cut in August. To reassess these expectations, investors are awaiting the release of key UK inflation data for June later today.

The Price

• Pound exchange rate today: The pound rose against the dollar by 0.1% to $1.3400, up from the opening price of $1.3385, with a recorded low at $1.3382.

• On Tuesday, the pound lost 0.3% against the dollar, marking its eighth consecutive daily loss — its longest losing streak since March 2020 — and hit a three-week low of $1.3379 due to the strengthening of the US currency and yields following strong US inflation data for June.

Andrew Bailey

Bank of England Governor Andrew Bailey told The Times on Monday that the direction of interest rates is definitely downward. In the interview, he gave a strong signal that the Bank would accelerate the pace of rate cuts if further signs of "slack" appear in the economy.

The term "slack" refers to a scenario where the economy is not operating at full capacity, with rising unemployment and slowing production. This is considered disinflationary and would reinforce the Bank’s confidence that inflation will fall to 2.0% by 2026, as currently forecast.

UK Interest Rates

• Traders are increasing their bets on Bank of England rate cuts, expecting at least 50 basis points of additional easing this year.

• The probability pricing for a 25-basis-point rate cut by the Bank of England in the August meeting currently stands above 80%.

UK Inflation Data

To reassess the current expectations regarding UK interest rates, investors are awaiting the release of key inflation data in the United Kingdom for June, which is expected to significantly influence the Bank of England's monetary policy path.

At 07:00 GMT, the Consumer Price Index is expected to show a year-on-year rise of 3.4% in June, matching the previous reading, while the core Consumer Price Index is also expected to rise by 3.5% year-on-year, also matching the prior reading.

Outlook for the British Pound

At Economies.com Today, we expect that if the UK inflation data comes in below market expectations, the likelihood of a rate cut in August will increase, which would lead to further downside pressure on the pound.

The Japanese yen declined in Asian markets on Wednesday against a basket of major and minor currencies, deepening its losses for the fourth consecutive day against the US dollar and hitting its lowest level in three months. It may soon fall below the 150-yen threshold due to the continued rise in yields on US 10-year Treasury bonds.

The latest US inflation report showed signs that President Donald Trump's tariffs have begun to affect prices, leading to reduced expectations of a US interest rate cut in September.

Despite rising expectations of a rate hike by the Bank of Japan in its meeting later this month, the market is still awaiting the release of more key economic data from Tokyo, including inflation, wages, and unemployment figures in the world’s third-largest economy.

The Price

• Japanese yen exchange rate today: The dollar rose against the yen by about 0.2% to ¥149.07 — the highest since April 3 — from today’s opening price of ¥148.83, with a low recorded at ¥148.71.

• The yen lost 0.8% against the dollar at Tuesday’s close, marking its third straight daily loss due to the US inflation data.

US Bond Yields

The yield on US 10-year Treasury bonds rose by 0.25% on Wednesday, extending gains for the fifth consecutive session, and reached a five-week high of 4.495%, which enhances the appeal of US dollar investments.

This development in the US bond market followed the release of the June US inflation report, which showed a second consecutive monthly rise in prices — the fastest pace in four months.

The Consumer Price Index rose by 2.7% year-on-year in June, up from 2.4% in May, surpassing market expectations of a 2.6% increase. This is the highest reading since February.

The rise in prices of various goods — such as coffee, audio equipment, and home furniture — contributed to the inflation uptick in June, with significant price hikes in these imported items due to Trump’s tariffs.

Following the data, and according to the CME Group's FedWatch tool: the pricing for a 25-basis-point interest rate cut at the September meeting dropped from 62% to 55%, while the probability of rates being kept unchanged rose from 38% to 45%.

Opinions and Analysis

• Nathaniel Casey, investment strategist at Evelyn Partners, said the rise in US commodity prices could be an early sign of inflationary pressures stemming from tariffs, though it is too soon to confirm this trend.

• Casey added: While this inflation report isn’t particularly alarming, the increase in commodity prices and ongoing uncertainty over future tariff levels might make the Federal Reserve and Chairman Jerome Powell hesitant to cut interest rates.

Japanese Interest Rates

• Recently released data in Tokyo has added pressure on policymakers at the Bank of Japan.

• Amid this data, the market pricing for a 25-basis-point rate hike by the Bank of Japan at the July meeting rose from 35% to 45%.

• To reassess these expectations, investors are awaiting more data on inflation, unemployment, and wages in Japan.

Corn futures prices in Chicago rose at the close of trading on Tuesday, continuing their rebound from recent lows, as US government data confirmed favorable conditions for this year’s corn crop.

Soybean prices declined as strong crop ratings weighed on the market, while wheat futures also dropped amid rising harvest volumes across the Northern Hemisphere that are casting a shadow over the market. Investors are awaiting US inflation data due later on Tuesday for further guidance, while continuing to assess the potential impact of the sweeping tariffs proposed by US President Donald Trump.

The US Department of Agriculture stated on Monday that 74% of the US corn crop and 70% of the soybean crop are in good or excellent condition — the highest July ratings since 2016.

Forecasts still point to a favorable mix of moderate heat and regular rainfall over the coming week across the US Midwest.

“US weather looks fantastic, but seasonal forecasts point to a general downturn,” said Peak Trading Research in a note. “Markets have shrugged off Trump’s new tariff wave and are now nervously awaiting today’s consumer price index reading,” it added, in reference to the CPI.

Corn regained some strength on Monday and during Tuesday’s trading, with analysts viewing the market as vulnerable to an upward correction from current low levels. Analysts at JP Morgan said, “We remain bullish on corn prices on the Chicago Board of Trade and expect the value to be attractive for consumers at these levels,” describing the corn market as being oversold.

Reuters calculations based on customs data showed that China, the world’s largest soybean buyer, imported record volumes of soybeans in June, driven by increased shipments from its biggest supplier, Brazil.

The National Oilseed Processors Association is expected to report that US demand for soybeans in June fell to its lowest level in four months, according to analysts, although it would still mark the largest June demand ever due to expanded processing capacity.

The wheat market is awaiting the results of an import tender from Algeria, which could boost potential demand amid plentiful harvests arriving across the Northern Hemisphere.

Corn

As for trading, corn futures for December delivery rose 0.3% at the end of the session to $4.19 per bushel.

Soybeans

Soybean futures for November delivery fell 0.5% to $10.01 per bushel.

Wheat

Wheat futures for September delivery settled down 0.5% at $5.38 per bushel.

Ethereum's price rose during Tuesday’s trading, in contrast to most other cryptocurrencies which faced continued selling pressure to take profits following Bitcoin’s recent strong gains.

Data from the US Department of Labor released today showed that the Consumer Price Index (CPI) rose by 2.7% year-on-year in June, in line with expectations, while the core inflation index — which excludes food and energy prices — recorded a monthly increase of 0.2%, which was lower than expected.

Following the release of the data, President Donald Trump stated that the Federal Reserve must cut interest rates, and he renewed his criticism and attacks on Federal Reserve Chair Jerome Powell.

This comes as markets await a busy week of crucial legislation for the cryptocurrency industry in the United States, with several bills up for a vote this week, amid support from the White House.

President Donald Trump is known for his favorable stance on digital assets. He previously spoke about Bitcoin at a campaign event, and his family launched a cryptocurrency project and a related digital token — a move that stirred ethical controversy.

Dan Coatsworth, investment analyst at AJ Bell, said: “Donald Trump spoke about making America the crypto capital of the world, and now the market hopes those words will turn into reality.”

He added: “The recent price action in Bitcoin suggests that investors and traders are expecting something big during Crypto Week. Bitcoin has surged about 10% in just five days. This reflects a wave of fear of missing out (FOMO), a recurring pattern we see whenever Bitcoin headlines dominate.”

He continued: “Crypto enthusiasts are convinced it’s the future of finance. And while there’s clear momentum in terms of interest from investors, governments, and companies, the landscape remains far from settled — with more questions than answers.”

Ethereum

As for trading, Ethereum’s price rose at 20:34 GMT on CoinMarketCap by 2.4% to $3,067.7.