Pound Sterling remains on backfoot amid caution ahead of Fed policy decision
|Pound Sterling remains on backfoot amid caution ahead of Fed policy decision
The Pound Sterling (GBP) extends its downside below the psychological support of 1.2500 against the US Dollar (USD) during Wednesday’s London session. Due to the light economic calendar in the United Kingdom, the volatility in the GBP/USD pair all comes from the side of the US Dollar as the United States faces a data-packed week, starting with the Federal Reserve decision (Fed) later on Wednesday.
The Pound Sterling’s valuation will solely be impacted by expectations for interest-rate cuts by the Bank of England (BoE). Financial markets speculate that the BoE could opt to cut borrowing costs in the June or August meetings. Traders have priced in rate cuts soon as BoE Governor Andrew Bailey said he is confident that headline inflation will come down to 2% in April. In March, UK inflation stood at 3.2%. Read more...
GBP/USD Forecast: Sellers encouraged as Pound Sterling stays below 1.2500
GBP/USD declined sharply on Tuesday and erased all of Monday's gains. The pair fluctuates in a tight range below 1.2500 as trading action remains subdued, with most major European markets staying closed in observance of the Labor Day holiday.
The renewed US Dollar (USD) strength caused GBP/USD to turn south in the American session on Tuesday. The Employment Cost Index rose 1.2% in the first quarter. This reading followed the 0.9% increase recorded in the previous quarter and surpassed the market expectation of 1%, reviving fears over strengthening wage inflation. Read more...
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