- GBP/USD remains steady as the pound shows stability amidst a vague BOE policy outlook.
- BOE’s Megan Greene cautioned about potential rate cuts, hinting at a pause in November due to rising inflation risks.
- The US dollar finds support from robust economic data, which could delay Fed interest rate cuts.
After experiencing two days of decline, GBP/USD is poised to trade around 1.3350 during Friday’s Asian session. The pound may stabilize as concerns about UK inflation and the Bank of England’s (BOE) uncertain policy direction come into play.
BOE member Megan Greene has expressed caution about lowering interest rates, suggesting a possible halt in November as inflation risks seem to be rising. However, Governor Andrew Bailey indicated that further measures may be necessary. “But when it is, how much it is, will depend on the pathway that will reduce inflation,” was his point.
Adding to the market’s challenges, political uncertainty surfaces as Manchester Mayor Andy Burnham advocates for the re-ethnicization of essential services and proposes financing for housing.
The GBP/USD pairing encounters difficulties as the US dollar strengthens following economic data from the US that exceeded expectations. Attention now shifts to the Personal Consumption Expenditures (PCE) Price Index data, which is the Federal Reserve’s favored inflation measure, expected later on Friday.
Strong economic performance may encourage the U.S. Federal Reserve to adopt a more cautious stance on rate cuts. The US GDP increased by 3.8% in the second quarter, surpassing estimates of 3.3%. Additionally, the GDP price index increased by 2.1%, compared to the anticipated 2.0%. Meanwhile, initial unemployment claims in the US dropped to 218K last week, which marks the lowest point since July, with market expectations rising to 235K from the previous 232K.
