- The GBP/USD hit 1.3724 on Thursday, marking its highest point since January 2022.
- Federal Reserve Chairman Powell cautioned that Trump’s tariff strategies might contribute to prolonged inflation.
- Boe’s Bailey raised concerns about slowing wage growth and rising economic inactivity.
During Asian trading on Thursday, the GBP/USD continued its upward trend for the fourth session, hovering around 1.3710. The pair reached 1.3724, a new peak since January 2022, following improved risk sentiment linked to a fragile ceasefire between Israel and Iran.
President Trump commented that the US and Iran are set to meet next week. However, Bloomberg reported that he expressed doubts about the necessity of a diplomatic solution regarding Iran’s nuclear program, referencing the damage caused by US airstrikes to significant locations.
Traders are also taking note of Fed Chairman Jerome Powell’s remarks. On Wednesday, Powell indicated that while Trump’s tariffs could trigger a temporary price increase, they might also lead to more persistent inflation, advising caution regarding potential interest rate cuts.
Additionally, there’s a growing sense of caution among traders amid speculation that Trump might announce Powell’s successor by September or October. Reports suggest he could choose former Fed governor Kevin Wahsh or Kevin Hassett, director of the National Economic Council.
In the UK, Bank of England Governor Andrew Bailey noted in his testimony to the Senate Economic Affairs Committee that the central bank might be facing a cooling labor market, which could affect wage agreements. He pointed out the deceleration in wage growth and a rise in economic inactivity.
