BoE's Bailey: Markets getting ahead of themselves by pricing in rate hikes – Reuters

Eren Sengezer FXStreet

While speaking to Reuters at the Bank of England's (BoE) London headquarters on Reuters, BoE Governor Andrew Bailey argued that markets are getting ahead of themselves by pricing in interest-rate hikes.

Key takeaways

"We will have to act if appropriate but tackling source of energy price shock is most important."

"If we have prolonged high energy prices and supply disruption, it will strain many countries quite seriously."

"I'm very clear we need to return inflation to target in way that causes least damage to growth and jobs."

"We look at inflation expectations very carefully, but short-run often follows headline inflation."

"Businesses I speak to say they have a real lack of pricing power."

"UK growth is below potential, labour market softening."

"MPC may debate case for a precautionary rate rise, but need to judge that in context of remit and how to return inflation to target."

"Gilt market moves orderly but stretched, we're watching it hourly."

"Need to watch out for investor loss of confidence in private credit."

Market reaction

GBP/USD preserves its bullish momentum following these comments and gains more than 0.5% on the day near 1.3300.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

GBP/USD edges lower below 1.3650, with eyes on US PCE data

GBP/USD trades with a negative bias below 1.3650 in the European session on Wednesday, eroding a part of the previous day's strong gains. The pair, however, remains within striking distance of a six-month top, set last Friday, as traders keenly await the release of the US Personal Consumption Expenditures (PCE) Price Index data for a fresh impetus.

EUR/USD holds lower ground near 1.1650 ahead of key US data

EUR/USD is holding lower ground toward 1.1650 in Wednesday's European session. The US Dollar is recovering modestly amid profit-taking and Middle East uncertainty. US inflation, tracked by the PCE, and another revision of Q2 GDP data should keep investors entertained on Wednesday.

Gold remains depressed below $4,650 on firmer USD; looks to US PCE for Fed rate outlook

Gold sticks to modest losses below $4,650 heading into the European session, though it lacks bearish conviction and remains confined within the previous day's broader range. The US Dollar regains positive traction amid some repositioning ahead of the US Personal Consumption Expenditures Price Index and is seen as weighing on the commodity. Adding to this, Federal Reserve Chair Kevin Warsh's remarks at the Jackson Hole Symposium on Friday might offer more cues about the interest rate path.

Dogecoin, Shiba Inu, Pepe: Profit-taking cools last week’s rally

Meme coins, including Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE), are losing their bullish momentum after last week’s double-digit gains. Facing downside pressure amid profit-taking, DOGE and PEPE risk further decline while SHIB holds at a support level.

America’s self‑inflicted trade wound

I’m conflicted about the trade war that the U.S. has started with Canada. Let’s be clear: any representation that Canada has been taking unfair advantage of the U.S. or that they have been treating us badly for years is a bogus characterization. In reality, the shoe is on the other foot. It’s the U.S. that has been behaving badly.

Canada hits US goods with tariffs; The rate market sees a problem

On September 8, Canada begins charging its own importers 15%, 25% and 50% on roughly 700 lines of American goods. The measure is billed as dollar for dollar, and on the arithmetic of covered trade it is. What it is not is a tax on the United States.