Pound Sterling Price News & Forecast: GBP/USD weakens to around 1.3470 on Wednesday

FXStreet Team FXStreet

British Pound softens below 1.3500 as traders await UK CPI data, Fed rate decision

The GBP/USD pair loses ground to near 1.3470 during the early Asian trading hours on Wednesday. The US Dollar (USD) strengthens against the British Pound (GBP) on expectations of a US interest rate hike. Traders brace for the UK August Consumer Price Index (CPI) inflation report and the Federal Reserve (Fed) interest rate decision later on Wednesday.

Markets are increasingly convinced that the Fed will hike the benchmark interest rate by 25 basis points (bps) at its September policy meeting on Wednesday in response to the jump in energy prices that has pushed underlying inflation by more than expected in August. Read more...

The Pound drifts lower as the Fed lines up a rate above the Bank of England's

GBP/USD closed Tuesday near 1.3470, down 0.2%. Wednesday's Asian and London hours are the last before the Fed is expected to raise its rate for the first time since July 2023. By the New York close its ceiling should sit a quarter-point above Bank Rate. The Bank of England votes on Thursday on whether to keep up, and is expected to let it.

A currency pair prices the gap between what two central banks are expected to pay, not the level either sits at. Bank Rate is 3.75%, the Fed's range tops out at 3.75%, and Wednesday takes the American ceiling to 4.00%. Futures then have the Fed at 4.25% or higher by March and, more likely than not, at 4.50% or higher by June. Britain's rate futures, according to Trading Economics, fully price four Bank of England hikes by the middle of next year, which is the same number. Of the three big central banks, the European Central Bank (ECB) has raised its rate twice since June, the Fed raises on Wednesday, and the Bank of England has not moved in 2026. Read more...

British Pound wilts as Oil shock sends US yields past 5%

The Pound Sterling (GBP) edges lower by some 0.07% against the US Dollar (USD) on Tuesday, with the latter enjoying inflows due to its haven status amid fears of a possible Oil supply shortage. The GBP/USD pair trades at 1.3487, after peaking at around 1.3505.

The Middle East conflict continues to escalate and a quick resolution seems far from happening. Both crude Oil benchmarks, Brent and West Texas Intermediate (WTI), rose by over 2.40% and 1.10%, respectively, triggering a jump in US Treasury yields, with the 10-year rising to 5.041%, a level last seen in 2007. Read more...

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