Pound Sterling Price News and Forecast: GBP edges higher reversing previous day’s corrective slide

British Pound holds positive bias above 1.3450 vs USD; upside potential seems limited

The GBP/USD pair attracts some dip-buyers during the Asian session on Wednesday and stalls the previous day's retracement slide from the vicinity of a nearly two-week top, levels just above the 1.3500 psychological mark. Spot prices currently trade just above mid-1.3400s, though the upside potential seems limited amid persistent geopolitical uncertainties.

Renewed US attacks on Iran dented hopes for an imminent deal to end a three-month-old Middle East conflict. Iran’s Foreign Ministry condemned the US attacks as a violation of a ceasefire that’s been in place since early April. Furthermore, the Islamic Revolutionary Guard Corps (IRGC) threatened to retaliate, keeping geopolitical risk premium in play. This, along with hawkish US Federal Reserve (Fed) expectations, might continue to act as a tailwind for the safe-haven US Dollar (USD) and keep a lid on the GBP/USD pair. Read more...

Pound Sterling coils while the BoE and Fed freeze in lockstep

Cable looks dead this week, and that is not an accident. The Bank of England (BoE) and the Federal Reserve (Fed) have quietly become the same central bank. Both are sitting on their hands, both are watching above-target inflation get shoved higher by the same Middle East oil shock, both have hawkish dissenters in the room, and both now face a market pricing the next move as a hike rather than a cut. When two policy paths line up this neatly, the interest rate differential that gives GBP/USD its direction simply stops moving, and the pair is left to grind sideways while everyone waits for one side to blink.

It is rare to see the transatlantic policy picture this symmetrical. The BoE has held Bank Rate at 3.75% for three meetings running, with its most recent vote splitting 8 to 1 in favour of a hold and the lone dissenter pushing for a hike. UK Consumer Price Index (CPI) inflation is running at 3.3%, and the bank itself expects energy pass-through to nudge it higher still over the coming quarters. Now look across the Atlantic, and the script is almost word-for-word identical. The Fed is parked, its speakers have leaned hawkish into the week, and traders are pricing a genuine chance of a July hike that barely existed a month ago. The same surge in Oil that is testing the BoE is testing the Fed, and neither bank can do much beyond wait and see how the shock propagates. Two committees, one exogenous problem, and no appetite on either side to commit. Read more...