GBP/USD consolidates near 15-month high, around 1.3130 area; bullish potential intact – by hareshmenghani GBPUSD Fed Inflation BOE Currencies
ast two weeks or so, to its highest level since April 2022. Spot prices currently trade around the 1.3130-1.3125 region and the fundamental backdrop still seems tilted firmly in favour of bullish traders.
The US Dollar remains under some selling pressure for the seventh straight day and hits a fresh 15-month low in the wake of firming expectations that the Federal Reserve is nearly done with its policy tightening cycle. The British Pound , on the other hand, continues to draw support from rising bets that the may need to raise interest rates further to combat high inflation.
Investors seem convinced that the US central bank will hold interest rates steady for the rest of the year after the widely expected 25 bps lift-off in July. The bets were lifted by the US CPI report on Wednesday, which showed a further moderation in consumer prices. Adding to this, the US Producer Prices Index recorded the smallest annual rise in nearly three years in June.
In contrast, the current market pricing indicates that the BoE could raise interest rates from the current 5% to a cycle peak of 6.5% to dampen demand and force inflation lower. The speculations were fueled by stronger UK wage growth data, which, according to BoE Governor Andrew Bailey and UK Finance Minister Jeremy Hunt, is harming the efforts to contain inflation.
on the last trading day of the week. Nevertheless, spot prices remain on track to register strong gains and end in the green for the second straight week.
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