- GBP/USD remains stable as the UK’s RICS home price balance dropped to -19% in August.
- The US dollar may weaken due to easing PPI expectations that had relaxed in September.
- Stronger US consumer price index data for August could raise the chances of a potential FED rate reduction next week.
GBP/USD hasn’t changed much for the second consecutive day, hovering around 1.3520 during Asian trading on Thursday. The pair has remained steady after the UK’s RICS home price balance fell to -19% in August, marking its lowest point in nearly two years, down from -13% in July. This outcome was worse than the anticipated -10.
The British pound might hold its ground against other currencies in the upcoming monetary policy meeting, as traders expect the Bank of England to maintain interest rates at 4%. GDP data from the UK set to be released on Friday is expected to show stagnant monthly growth, following a 0.4% rise in June. Diminishing economic momentum could lead to heightened market expectations for further BOE rate cuts later this year.
The US dollar may encounter difficulties, as market expectations for a 25 basis points rate cut during the US September meeting are fully priced in, according to the CME FedWatch tool.
Traders are also looking ahead to the US Consumer Price Index (CPI) due later today, which could fuel hopes for a significant 50-point salary tax cut next week. The headline CPI is projected to rise by 2.9% year-on-year for August, while core CPI is expected to increase by 3.1% year-on-year in the same period.
