With a July interest rate rise now all but locked in for the US, we can expect a continued upside bias for the USD vs other major currencies.

At the ECB Forum on Central Banking in Sintra, Portugal, central bank leaders were unequivocal on the need for further monetary tightening. The DXY surged with the EUR/USD and GBP/USD hit particularly hard.

Volatility in the GBP/USD pair is likely to continue as traders look to a second day of testimony from Jay Powell, Chairman of the US Federal Reserve Bank.

Inflation is expected to remain high in the UK, diverging from the Eurozone and USA, where inflation is falling rapidly. UK interest rates should continue to rise as a result, supporting the GBP in the short and medium term.

The EUR bulls are back in control of the EUR/USD and it is clear that the markets do not believe that the Fed is going to continue hiking interest rates in the medium term, despite the hawkish rhetoric.