- GBP/USD shows appreciation as the US dollar weakens following dovish comments from the Federal Reserve.
- Mary Daly, President of the San Francisco Fed, described the expectation of two interest rate cuts this year as a “rational” perspective.
- The pound found support from mixed employment figures in the UK.
GBP/USD is poised to gain after trading around 1.3440 during Asian hours on Friday, recovering from a slight setback in the previous session. The pair benefits from the dollar’s decline, influenced by the Federal Reserve’s recent comments.
Mary Daly, the San Francisco Fed President, indicated that anticipating two interest rate cuts this year is a “rational” expectation, advising against waiting too long. She mentioned that the rates will likely stabilize above 3% eventually.
Governor Christopher Waller noted late Thursday that he expects the US Central Bank to lower interest rate targets in July, citing growing economic risks. Waller warned that delays could necessitate more decisive measures later on.
Despite this, the US dollar maintained strength following stronger-than-expected retail sales data released on Thursday. Retail sales in the US saw a 0.6% increase in June, compared to a previous decline of 0.9%, exceeding the expected 0.1% rise. Annual retail sales also grew by 3.9%, up from the previous 3.3% increase. Attention will turn later on Friday to consumer sentiment from the University of Michigan, along with building permits and housing starts.
Meanwhile, the GBP/USD pair also gained traction as the pound found backing from mixed job market data from the UK.
The UK’s ILO unemployment rate increased to 4.7% in the three months leading up to May. Additionally, the change in claims showed an increase of 25.9k in unemployment benefits in June.
