- The pound rose to nearly 1.3150 against the US dollar as traders strengthened their bet that the Fed will cut interest rates by 50 basis points when it meets next week.
- The slowdown in the U.S. Producer Price Index (PPI) for August has led to expectations of a big rate cut from the Fed.
- Investors are betting the Bank of England is unlikely to cut interest rates next week.
The British pound (GBP) performed strongly against major currencies on Friday. The currency was boosted by several tailwinds, including rising speculation that the Federal Reserve will aggressively cut interest rates, improving market sentiment, and firm expectations that the Bank of England (BoE) will continue a gradual easing cycle.
Historically, a scenario in which the Fed is more aggressively pivoting to normalize policy makes risk assets more attractive. S&P 500 futures posted nominal gains in Asian markets after Thursday's bull run, signaling improving investor risk appetite.
The Bank of England is unlikely to cut interest rates at its next policy meeting next week, according to a Reuters poll. All 65 economists in the Reuters poll said the bank was likely to keep rates on hold at 5.0 percent on Thursday after cutting them from a 16-year high of 5.25 percent in August.
Meanwhile, the next big trigger for the pound will be the release of UK Consumer Price Index (CPI) data for August on Wednesday. The latest Bank of England forecasts suggest that UK annual headline inflation will remain above 2% until the end of the year.
today british pound price
The table below shows the percentage movement of the British Pound (GBP) against the major listed currencies today: The British Pound was strongest against the Australian Dollar.
| GBP | EUR | USD | JPY | CAD | Australian Dollar | NZD | Swiss Franc | |
|---|---|---|---|---|---|---|---|---|
| GBP | -0.04% | 0.09% | -0.63% | 0.05% | 0.25% | 0.12% | -0.20% | |
| EUR | 0.04% | 0.14% | -0.62% | 0.09% | 0.28% | 0.13% | -0.17% | |
| USD | -0.09% | -0.14% | -0.73% | -0.00% | 0.17% | -0.05% | -0.29% | |
| JPY | 0.63% | 0.62% | 0.73% | 0.74% | 0.91% | 0.75% | 0.46% | |
| CAD | -0.05% | -0.09% | 0.00% | -0.74% | 0.16% | 0.05% | -0.28% | |
| Australian Dollar | -0.25% | -0.28% | -0.17% | -0.91% | -0.16% | -0.13% | -0.45% | |
| NZD | -0.12% | -0.13% | 0.05% | -0.75% | -0.05% | 0.13% | -0.32% | |
| Swiss Franc | 0.20% | 0.17% | 0.29% | -0.46% | 0.28% | 0.45% | 0.32% |
The heat map displays the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select British Pound from the left column and move it along the horizontal line to US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Daily Digest Market Trends: Pound rises on positive market mood
- The British Pound continued to recover against the US Dollar (USD) to near 1.3150 during the London session on Friday. The GBP/USD pair rose as the US Dollar (USD) fell sharply on market expectations that the Federal Reserve (FRB) will begin to aggressively cut interest rates starting next week following the August US Producer Price Index (PPI) data.
- The US Dollar Index (DXY), which tracks the greenback's value against six major currencies, fell further to around 101.00.
- The PPI report showed that the annual headline producer price index rose 1.7%, slower than the 1.8% expected and the 2.1% reported in July. During the same period, core PPI, which excludes volatile food and energy prices, rose steadily to 2.4%. Investors had expected core PPI to accelerate to 2.5%. Meanwhile, monthly headline and core PPI rose at a faster pace, at 0.2% and 0.3%, respectively.
- According to the CME FedWatch tool, the likelihood that the Fed will cut interest rates by 50 basis points (bps) in September to 4.75%-5.00% has jumped to 43% from 14% prior to the release of the U.S. Producer Price Index (PPI) data.
- In Friday's session, investors will be focusing on preliminary data from the Michigan Consumer Sentiment Index for September, which is estimated to remain roughly flat at 68.0 from the previous reading of 67.9.
Technical reasons: Pound bounces off 1.3000
The British Pound has rebounded sharply against the US Dollar to around 1.3150. The GBP/USD pair has seen strong buying interest near the trendline drawn from the December 28, 2023 high of 1.2828, which led to a strong rebound after the breakout on August 21. Also, the 20-day exponential moving average (EMA) near 1.3080 is acting as a major support for the British Pound’s appeal.
The 14-day Relative Strength Index (RSI) is remaining within the range of 40.00 to 60.00. A new bullish impulse will occur if the Momentum Oscillator rises above 60.00.
On the upside, the pound will face resistance at the round level of 1.3200 and near the psychological level of 1.3500. On the downside, the psychological level of 1.3000 emerges as a key support for the pound bulls.
