Forex Today: All eyes on BoE rate decision
Here is what you need to know on Thursday, September 17:
The US Dollar Index (DXY) has managed to reclaim the 100.00 psychological level as traders assess the US Federal Reserve (Fed) rate hike decision. The US central bank raised its benchmark interest rate by 25 basis points (bps) at its September meeting on Wednesday. This marks the Fed’s first interest rate hike in three years
Fed Chairman Kevin Warsh said during the press conference that inflation has been “too high ... for too long.” Updated projections the committee showed that a strong majority of Fed officials think another hike is possible later this year. Money markets priced in about a 49.8% chance of a Fed hike in October, according to the CME FedWatch tool.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.13% | -0.10% | -0.40% | -0.02% | -0.41% | -0.46% | -0.25% | |
| EUR | 0.13% | 0.04% | -0.27% | 0.14% | -0.29% | -0.30% | -0.10% | |
| GBP | 0.10% | -0.04% | -0.29% | 0.09% | -0.32% | -0.33% | -0.12% | |
| JPY | 0.40% | 0.27% | 0.29% | 0.34% | 0.00% | -0.07% | 0.14% | |
| CAD | 0.02% | -0.14% | -0.09% | -0.34% | -0.38% | -0.42% | -0.19% | |
| AUD | 0.41% | 0.29% | 0.32% | 0.00% | 0.38% | -0.02% | 0.16% | |
| NZD | 0.46% | 0.30% | 0.33% | 0.07% | 0.42% | 0.02% | 0.25% | |
| CHF | 0.25% | 0.10% | 0.12% | -0.14% | 0.19% | -0.16% | -0.25% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Traders brace for the weekly Initial Jobless Claims report due later on Thursday, seconded by Housing Starts, Building Permits, Pending Home Sales and the Philly Fed Manufacturing Index.
Reuters reported on Wednesday that US President Donald Trump is expected to meet Gulf leaders on the sidelines of the UN General Assembly in New York next Tuesday to discuss the next steps in the Iran war. The discussion is likely to focus on US ideas for a postwar strategy as Trump and his administration work on a day-after plan expected to be finalized after the midterms.
Meanwhile, Iran vowed to fight on “until the last drop of blood” after threatening the US that peace talks will not resume until all of their conditions are met.
Dollar support builds as Fed dots stay modestly hawkish
Analysts at Danske Bank note that in the US, the Fed “delivered a 25bp rate hike with unanimous support,” with the updated dots described as “modestly hawkish relative to expectations.” They highlight that Fed chairman Warsh stressed he and the monetary policy committee “still see monetary policy as accommodating growth,” underscoring the central bank’s view that policy remains supportive even after the latest move.
Danske Bank points out that “the new 2026 dot points to one more hike, in line with consensus and our expectation,” while “the 2027 median signals no further tightening,” though they emphasize that “eight participants still see rates rising to 4.25-4.50%, consistent with our call.” On the macro backdrop, the bank notes that “growth was revised slightly higher for both this year and next, while inflation expectations were broadly unchanged,” reinforcing the impression of resilient US activity alongside a steady inflation outlook.
Fed’s Warsh underscores inflation fight as economy strength allows focus on price stability
Warsh’s press conference tone was distinctly hawkish, with a FXS Speechtracker score of 7.4/10, modestly above the 7/10 historical average and signaling a firmer stance on tightening. By stressing that “because of underlying strength of the economy we can afford to focus on price stability” and that “we decided to remove a dose of accommodation,” the remarks frame today’s move as a deliberate step toward restraining inflation rather than a cautious tweak. Emphasis on trends over single data points, full employment, and the foundational role of price stability for real Dollar wage gains reinforces a narrative of confidence in growth and intolerance for persistent price pressures.
The FXS Fed Sentiment Index jumped by +26.07 points to 151.79, firmly in hawkish territory and consistent with the above-baseline FXS Speechtracker score. This sharp move higher signals that markets will read the decision and Warsh’s messaging as a clear shift toward prioritizing inflation control, with implications for Dollar support versus other major currencies.
EUR/USD declines to a near seven-week low around 1.1450 in the European morning. The European Central Bank (ECB) delivered a 25 bps rate hike last week and reiterated it won’t pre-commit to further steps after raising rates for a second time since the Iran war started. ECB policymaker Philip Lane’s speech and the final Eurozone inflation data will be the highlights from the Euro docket.
GBP/USD gathers strength to near 1.3400, snapping the three-day losing streak on Thursday. Markets expect the Bank of England (BoE) to leave the interest rate unchanged at 3.75% in September later in the day.
USD/JPY faces some selling pressure in the European session on Thursday. The Bank of Japan (BoJ) is widely expected to raise interest rates by a quarter-percentage point to 1.25% on Friday, the highest level in three decades, marking its second hike in borrowing costs this year.
Gold rebounds above $4,300 on Wednesday. The Fed rate hike and Warsh’s remarks about a commitment to fighting inflation could create a headwind for the precious metal in the near term.
BoE FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
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