GBP/USD advances to near 1.2700 due to rising expectations for Fed rate cuts in 2024


  • GBP/USD extends gains as softer US inflation raises expectations for Fed rate cuts in 2024.
  • The US Dollar faces a challenge as US Treasury yields inch lower.
  • The Pound Sterling may face a challenge as the BoE is expected to deliver 60 basis points rate cuts in 2024.

The GBP/USD pair extends its gains for the second consecutive session, trading around 1.2710 during the Asian hours on Monday. A weaker US Dollar (USD) supports the GBP/USD pair. April data indicated that US consumer inflation had slowed to 0.3%, raising expectations for potential Federal Reserve (Fed) rate reductions in 2024. However, the US Fed maintains a cautious stance regarding inflation and the possibility of rate cuts in 2024.

According to the CME FedWatch Tool, the likelihood of the Federal Reserve delivering a 25 basis-point rate cut in September has slightly increased to 49.0%, up from 48.6% a week ago. This potential easing of monetary policy by the central bank could undermine the US Dollar and bolster the GBP/USD pair.

On Friday, Federal Reserve Board of Governors member Michelle Bowman made headlines by noting that the progress on inflation might not be as steady as many had hoped. Bowman indicated that the decline in inflation observed in the latter half of last year was temporary and that there has been no further progress on inflation this year. Moreover, Richmond Fed President Thomas Barkin noted that inflation is easing but highlighted that it will "take more time" to reach the Fed’s 2% target.

In the United Kingdom (UK), investors expect a potential 60 basis points (bps) interest rate cut by the Bank of England (BoE) in 2024, with the initial cut expected in August. The UK Consumer Price Index (CPI) data for April, set to be published on Wednesday, is forecasted to show an annual rise of 2.7%, according to FactSet estimates. This data is expected to significantly influence the Pound Sterling (GBP).

BoE Governor Andrew Bailey remarked after the release of March’s CPI data, “Inflation in the UK will fall near its 2% target next month,” noting that inflation has declined roughly in line with the BoE’s February forecast.

GBP/USD

Overview
Today last price 1.2709
Today Daily Change 0.0008
Today Daily Change % 0.06
Today daily open 1.2701
 
Trends
Daily SMA20 1.2538
Daily SMA50 1.2588
Daily SMA100 1.2632
Daily SMA200 1.2541
 
Levels
Previous Daily High 1.2712
Previous Daily Low 1.2645
Previous Weekly High 1.2712
Previous Weekly Low 1.2509
Previous Monthly High 1.2709
Previous Monthly Low 1.23
Daily Fibonacci 38.2% 1.2686
Daily Fibonacci 61.8% 1.2671
Daily Pivot Point S1 1.266
Daily Pivot Point S2 1.2619
Daily Pivot Point S3 1.2593
Daily Pivot Point R1 1.2727
Daily Pivot Point R2 1.2753
Daily Pivot Point R3 1.2794

 

 

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