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Attention is on two key central bank decisions today, SNB and BoE.

SNB kicks off at 7:30 GMT and is widely expected to deliver a 25bps rate cut, bringing the policy rate back to 0.00%. Speculation about a return to negative rates has intensified after Swiss CPI dipped into deflation at -0.1% yoy in May. While Chair Martin Schlegel has downplayed the importance of a single data point, he has remained open to using negative rates again if disinflation proves persistent.

The Swiss central bank faces a complicated backdrop. A stronger Swiss Franc—driven by haven flows amid the global trade war, Middle East conflict, and lingering Russia-Ukraine war—has intensified deflation risks. Euro's strength on the back of expected fiscal expansion in Germany and the EU has provided some breathing room. Still, deflation pressures remain elevated. SNB is likely to signal readiness to act further, whether through rate cuts or FX intervention, should inflation remain subdued.

Later in the day, BoE takes the stage at 11:00 GMT. The Bank is expected to keep its policy rate unchanged at 4.25%, with Governor Andrew Bailey maintaining a message of "gradual and cautious" easing. While recent economic data—including GDP and labor market indicators—have disappointed, BoE faces added complexity from surging oil prices driven by geopolitical tensions. The central bank may be wary of loosening policy too quickly under such volatile global conditions.

Internal divisions remain a key story at the BoE. In May, the vote was notably split: five members favored a 25bps cut, two wanted a larger 50bps move, and two preferred holding. Today’s voting breakdown will give a clearer view of where consensus is forming. While a Reuters poll suggests most economists expect cuts in August and again in Q4, much will depend on how services inflation evolves and whether external shocks abate.

Technically, GBP/CHF's decline from 1.1200 is still in progress. Deeper fall is in favor as long as 1.1059 resistance holds. Next target is 61.8% retracement of 1.0610 to 1.1200 at 1.0835.

Considering GBP/CHF was rejected by 55 W EMA as seen in the weekly chart, firm break of 1.0835 would argue that fall from 1.1675 is ready to resume through 1.0610 low.

May’s Australian employment data surprised to the downside, with a -2.5k decline compared to expectations of a 19.9k gain. Yet beneath the weak headline, the composition was stronger than it appears: full-time jobs surged 38.7k while part-time jobs plunged by -41.1k.

Unemployment rate was unchanged at 4.1%, and the participation rate edged down from 67.1%to 67.0%, both suggesting a labor market that’s cooling slightly, but not cracking.

A sharp 1.3% mom rebound in total hours worked provides further reassurance, marking a recovery from recent holiday and weather-driven softness.

Full Australia employment release here.

New Zealand’s GDP grew 0.8% qoq in Q1, slightly ahead of expectations of 0.7% qoq. On a per capita basis, output rose 0.5% qoq.

Gains were broad-based, with all major sectors contributing positively: goods-producing industries led the way at 1.3% qoq, followed by primary industries at 0.8% qoq, and services at 0.4% qoq. Manufacturing and business services were standout performers among the detailed industries, helping to drive the recovery.

Despite the quarterly uptick, GDP contracted by 1.1% over the year to March 2025.

Full NZ GDP release here.

New Zealand’s GDP rose by 0.8% in the March quarter, slightly ahead of market forecasts. Our view remains that the RBNZ will pause to assess in July.

Key results

• Quarterly change: +0.8% (last: +0.7%, Westpac f/c: +0.7%, market f/c: +0.7%, RBNZ +0.4%)
• Annual change: -0.7% (last: -1.3%)

New Zealand’s GDP rose by 0.8% in the March quarter, slightly ahead of market forecasts which had converged on a 0.7% increase. Revisions to the recent history were largely offsetting, with December quarter growth revised down from 0.7% to 0.5%, while the June and September quarters were both shaded up from -1.1% to -1.0%.

While overall growth was above our forecast, it was less broad-based than we were expecting. The largest contribution came from professional services, with a 2.7% gain for the quarter, led by computing services. There were also large increases in machinery manufacturing (up 6.4%) and healthcare and social assistance (up 1.4%). There were modest gains sprinkled across a range of other sectors, but with some surprising declines in a range of services such as communications, finance, real estate, and arts and recreation.

The result was ahead of the 0.4% rise that the RBNZ forecast in its May Monetary Policy Statement, which was prepared before some of the recent data that prompted us and others to revise up our forecasts. With the economy regaining its footing sooner than expected after last year’s sharp downturn, we continue to expect that the RBNZ will take the opportunity to pause and assess the situation at its July OCR review.

However, that assessment will depend on how things are looking going forward. The RBNZ has already factored in a soft 0.2% rise in GDP for the June quarter – partly adjusting for the residual seasonality that has crept into the GDP figures. Our forecast currently sits at 0.6%, but we will assess this in the next couple of weeks. The details of today’s figures offered a range of surprises in both directions, but with no obvious implication for our forecast on balance.

Key Highlights

• GBP/USD failed to extend gains above 1.3620 and corrected lower.
• It traded below a bullish trend line with support at 1.3515 on the 4-hour chart.
• EUR/USD is still consolidating gains above the 1.1450 zone.
• WTI Crude Oil prices started a fresh increase above the $73.50 resistance.

GBP/USD Technical Analysis

The British Pound made a few attempts to surpass 1.3620 against the US Dollar but failed. GBP/USD started a downside correction below the 1.3550 level.

Looking at the 4-hour chart, the pair traded below a bullish trend line with support at 1.3515. The pair settled below the 1.3500 level and the 100 simple moving average (red, 4-hour). It tested the 1.3420 support and the 200 simple moving average (green, 4-hour).

It started a consolidation phase above the 1.3400 zone. On the upside, the pair could face resistance near the 1.3515 level and the 100 simple moving average (red, 4-hour).

The next key resistance sits near the 1.3540 level. The first major resistance sits at 1.3620. A close above the 1.3620 level could set the pace for another increase. In the stated case, the pair could even clear the 1.3700 resistance. The next major stop for the bulls could be near the 1.3800 resistance.

On the downside, immediate support is near the 1.3400 level. The next key support sits near 1.3340. Any more losses could send the pair toward the 1.3220 level. The main support could be near 1.3150.

Looking at WTI Crude Oil, the price found support near $70.00 and started a fresh increase above the $73.50 resistance.

Upcoming Economic Events:

• BoE Interest Rate Decision - Forecast 4.25%, versus 4.25% previous.

USDCAD: ⬆️ Buy

• USDCAD broke daily down channel
• Likely to rise to the resistance level at 1.3730

USDCAD currency pair recently broke the resistance trendline of the daily down channel from the start of May.

The breakout of this down channel follows the earlier upward reversal from the pivotal support level 1.3545 coinciding with the lower daily Bollinger Band.

USDCAD currency pair can be expected to rise to the next resistance level at 1.3730 (former strong support from May).

Gold: ⬇️ Sell

• Gold reversed from resistance level 3445.00
• Likely to fall to support level 3300.00

Gold recently reversed with the Bearish Engulfing from the resistance level 3445.00, which is the lower border of the resistance area which has been reversing the price from April.

The resistance level 3445.00 was further strengthened by the upper daily Bollinger Band.

Given the strength of the resistance level at 3445.00 and the bearish divergence on the daily Stochastic indicator, Gold can be expected to fall to the next support level at 3300.00 (the low of the previous minor correction ii).

• The Fed maintained its monetary policy unchanged as widely expected.
• The updated median 'dots' still signal two more 25bp rate cuts by the end of the year. Median rate projection for 2026-27 shifted 25bp higher, but the distribution of views within FOMC remained little changed.
• Market reaction was generally muted. We still expect the Fed to cut in September and December, followed by three more reductions in 2026. We forecast EUR/USD at 1.20 and 10y UST yield at 4.50% in 12M horizon.

FOMC's June meeting was mostly about stocktaking as tariff uncertainty leaves little room for forward-looking policy views. Powell repeated the familiar message of the Fed remaining 'in a good place' with its current policy stance.

The policy statement was little changed, as the Fed only omitted the May addition of "[committee] judges that the risks of higher unemployment and higher inflation have risen". Powell clarified that the Fed sees peak-trade war uncertainty easing, but that uncertainty in general remains elevated.

In our preview, we speculated if the Fed would take a firmer stance on whether the trade war appeared more concerning from inflation or labour market standpoint. That was not the case, however, as the Fed does not yet appear confident enough to draw strong conclusions from data received since the 'Liberation Day'.

Median 2025 GDP forecast was revised down to 1.4% (from 1.7%) and 2026 to 1.6% (from 1.8%) - largely in line with expectations. Both inflation and unemployment rate forecasts were revised up modestly. Powell affirmed that incoming data on both labour markets and inflation has been promising, but that the Fed continues to monitor how the tariff costs will be absorbed by consumers and businesses before cutting rates further.

The median 'dots' still signal two rate cuts over the rest of the year. The median rate projection was revised up by 25bp for 2026-27, now signalling only one cut each year. However, the central tendency range (which illustrates the distribution of views omitting the three highest and lowest observations) remained completely unchanged throughout the forecast horizon. Participants judged that risks surrounding the GDP estimate remain skewed to the downside, and to the upside for inflation - as was the case in March.

Powell downplayed the risk of persistent inflation pressures stemming from the Israel-Iran conflict, which is well in line with the Fed's general tendency to look through short-term volatility in financial conditions.

We maintain our Fed call unchanged and still see 25bp rate cuts in September and December this year, followed by three more reductions in 2026. As we gain more clarity around both the level of tariffs and their pass-through to prices, and as economic growth continues to cool both cyclically and structurally, we think the Fed still has plenty of room for cuts ahead. Market reaction was limited, and markets price in around 18bp worth of cumulative cuts by September and 48bp by December.

Summary

• The FOMC voted unanimously today to keep its target range for the federal funds rate unchanged at 4.25%-4.50%.
• In its post-meeting statement, the FOMC noted an easing in market volatility since its last meeting in May, stating "uncertainty about the economic outlook has diminished." That said, the Committee continued to characterize the level of uncertainty as "elevated."
• The Summary of Economic Projections showed the FOMC sees a bit more stagflation than its last published forecasts in March. The median GDP forecast was downgraded in 2025 and 2026 while the median forecast for core PCE inflation and the unemployment rate edged up for both years.
• The "dot plot" showed that the median FOMC member continued to look for 50 bps of easing by the end of 2025, while the median dot for year-end 2026 shifted up from 100 bps of easing in March to 75 bps in June.
• The dispersion of the dots shows the Committee remains divided regarding the outlook for monetary policy. We currently look for the FOMC to commence an easing cycle in September and expect 75 bps of rate cuts by year-end. That said, the uncertain outlook regarding U.S. trade policy imparts an unusually high degree of uncertainty to the outlook for monetary policy.

Uncertainty Has Diminished But It Remains Elevated

The Federal Open Market Committee (FOMC) decided to maintain its target range for the federal funds rate at 4.25%-4.50% at the conclusion of its policy meeting today. The decision was unanimously supported by all 12 voting members of the Committee and was universally expected by market participants. After easing policy by 100 bps between last September and December, the FOMC has now kept rates on hold for four consecutive policy meetings (Figure 1).

In outlining its reasons for maintaining the federal funds rate in its current target range, the FOMC said in its post-meeting statement that "economic activity has continued to expand at a solid pace." The statement also noted that "the unemployment rate remains low" and that "labor market conditions remain solid." The statement continued to characterize inflation as "somewhat elevated." Indeed, the year-over-year rate of core PCE inflation, which most Fed officials believe is the best measure of the underlying rate of consumer price inflation, continues to run a bit above the FOMC's target of 2% (Figure 2). The Committee is more or less implying that it does not need to ease policy at this time because the economy generally remains resilient and inflation continues to exceed the Committee's target.

In the statement that was released after the last meeting on May 7, the FOMC noted that "uncertainty about the economic outlook has increased further" (emphasis ours). That meeting occurred soon after President Trump announced his "Liberation Day" tariffs, which led to volatility in financial markets. The president has subsequently reduced the "reciprocal" tariffs while negotiating trade agreements with some foreign countries. Consequently, volatility in financial markets has subsided somewhat. Reflecting this easing of tensions, the statement today noted that "uncertainty about the economic outlook has diminished." That said, the Committee continued to characterize the level of uncertainty as "elevated." The statement continued to stress that the FOMC "is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective."

Dot Plot Shows that the FOMC Is Divided Regarding Outlook for Policy

The FOMC publishes its Summary of Economic Projections (SEP), which summarizes the macroeconomic forecasts of the 19 individual FOMC members, four times a year. The summary forecasts that were published today imply that the FOMC sees a bit more stagflation than it did in March. Specifically, the median GDP growth forecast was reduced by about 1/4 percentage point in both 2025 and 2026 while the median forecast for core PCE inflation was raised by about 1/4 percentage point in both years. The median forecast for the unemployment rate at the end of this year edged up from 4.4% in the March SEP to 4.5% in the June SEP. The rate for the end of 2026 rose by 0.2 percentage points relative to the March SEP, to 4.5%. The increase in the jobless rate in both years reflects the slower growth forecasts in June relative to March.

The "dot plot" that was released in March showed that the median FOMC member thought that 50 bps of rate cuts by the end of 2025 and a cumulative amount of 100 bps of policy easing by year-end 2026 would be appropriate. The dot plot that was published after the conclusion of today's meeting showed the median dot for year-end 2025 remaining unchanged, which continues to imply 50 bps of easing from the current target range of 4.25%-4.50% (Figure 3). That said, the Committee remains divided regarding the outlook for monetary policy this year. There are currently 10 members who believe that either 50 bps or 75 bps of rate cuts would be appropriate by the end of 2025. Two FOMC participants think that only 25 bps of policy easing this year would be appropriate. Seven members currently believe the Committee should remain on hold all year. There were only four participants in March who thought that the FOMC should refrain from cutting rates this year.

The median dot for year-end 2026 shifted up from 100 bps of cumulative easing in March to 75 bps in June. Again, however, the dispersed nature of dots for next year implies a meaningful number of different views among individual FOMC members regarding the outlook for monetary policy (Figure 3). Indeed, Chair Powell noted in his post-meeting press conference that "no one holds these rate paths with a great deal of conviction."

Outlook for Monetary Policy Remains Highly Uncertain

The dot plot and Powell's comment imply to us that the outlook for policy remains highly uncertain due, at least in part, to the uncertain outlook for U.S. trade policy. Higher tariffs will likely weigh on real GDP growth, which could be offset by policy easing, while also raising inflation, which would likely induce the FOMC to remain on hold if not tighten policy. As we discussed in our most recent U.S. Economic Outlook, we think the FOMC will look through any one-off price increases caused by tariffs and instead concentrate on the growth-eroding and unemployment-increasing effects of higher import duties. We currently look for the FOMC to commence an easing cycle in September, and look for 75 bps of rate cuts by the end of the year. That said, we readily acknowledge that the FOMC may refrain from cutting rates if inflation expectations rise and/or wages accelerate. Chair Powell also said in his press conference that policymakers "think they will learn a great deal on tariffs over the summer." We also will be focused intently on economic developments in coming months.