GBP/USD rallies on resurgence of Fed rate cut hopes


content provided with permission by FXStreet


  • GBP/USD
    pushed
    back
    into
    the
    high
    end
    after
    Fed
    nods
    at
    inflation
    progress.

  • BoE
    rate
    cut
    expectations
    also
    tick
    higher.

  • Key
    US
    inflation
    data
    looms
    ahead.


GBP/USD

rallied
on
Wednesday,
clipping
into
a
four-week
peak
after
broad-market
expectations
of
future
rate
cuts
reignited
following

Federal
Reserve

(Fed)
Chairman
Jerome
Powell’s
wrap-up
of
the
two-day
Semi-Annual
Monetary
Policy
Report.
UK
data
is
limited
to
mid-tier
Industrial
Production
figures
on
Thursday,
but
looming
US
Consumer
Price
Index
(CPI)
inflation
will
draw
plenty
of
investor
eyes
during
Thursday’s
American
market
session.



Forex

Today:

Gearing
up
for
US
CPI

Rate-cut-hungry
markets
decided
that
Fed
Chair
Powell’s
appearances
before
Congressional
committees
was
close
enough
to
dovish
this
week,
with
Powell
giving
a
cautious
nod
to
recent
progress
on
inflation.
Risk
appetite
has
recovered
as
investors
lean
back
into
hopes
for
a
September
rate
cut,
and
investors
will
be
looking
for
an
undershoot
of
US
CPI
inflation
on
Thursday,
with
median
market
forecasts
expecting
annualized
core
CPI
inflation
in
June
to
hold
steady
at
3.4%.


Powell
speech:

We
see
current
Fed
policy
as
restrictive

GBP
traders
are
leaning
into
bets
of
an
August
rate
cut
from
the

Bank
of
England

(BoE)
despite
cautious
tones
from
several
BoE
policymakers
on
Wednesday,
and
UK
Industrial
Production
figures
earlier
Thursday
will
be
a
key
bellwether
for
rate
cut
hopes.
UK
Industrial
Production
is
expected
to
recover
to
0.2%
MoM
from
the
previous
decline
of
-0.9%.


BoE’s
Mann:

We
need
to
see
sustained
slower
service
inflation

Further
US
inflation
data
is
due
on
Friday,
with
core
US
Producer
Price
Index
(PPI)
wholesale
inflation
expected
to
tick
upwards
to
2.5%
YoY
from
the
previous
2.3%,
which
could
pose
a
stumbling
block
to
broad-market
rate
cut
hopes.

British
Pound
PRICE
Today

The
table
below
shows
the
percentage
change
of
British
Pound
(GBP)
against
listed
major
currencies
today.
British
Pound
was
the
strongest
against
the
US
Dollar.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   -0.04% -0.04% -0.06% -0.03% -0.07% -0.12% -0.04%
EUR 0.04%   0.02% -0.04% 0.02% -0.02% -0.07% 0.00%
GBP 0.04% -0.02%   -0.02% 0.00% -0.03% -0.08% 0.01%
JPY 0.06% 0.04% 0.02%   0.03% -0.00% -0.09% 0.03%
CAD 0.03% -0.02% -0.01% -0.03%   -0.06% -0.10% -0.01%
AUD 0.07% 0.02% 0.03% 0.00% 0.06%   -0.06% 0.04%
NZD 0.12% 0.07% 0.08% 0.09% 0.10% 0.06%   0.10%
CHF 0.04% -0.01% -0.01% -0.03% 0.00% -0.04% -0.10%  

The
heat
map
shows
percentage
changes
of
major
currencies
against
each
other.
The
base
currency
is
picked
from
the
left
column,
while
the
quote
currency
is
picked
from
the
top
row.
For
example,
if
you
pick
the
British
Pound
from
the
left
column
and
move
along
the
horizontal
line
to
the
US
Dollar,
the
percentage
change
displayed
in
the
box
will
represent
GBP
(base)/USD
(quote).

GBP/USD
technical
outlook

Cable’s
bullish
resurgence
on
Wednesday
has
left
bids
buried
deep
in
a
supply
zone
priced
in
above
the
1.2800
handle,
and
price
action
is
stretched
thin
on
the
high
side.
A
downside
recovery
could
send
price
back
to
the
200-day
Exponential
Moving
Average
(EMA)
near
1.2600,
and
the
burden
of
preventing
a
swing
low
into
familiar
technical
levels
will
see
bulls
working
double
duty
to
try
and
chalk
in
a
meaningful
higher
low
on
daily
candlesticks.

GBP/USD
hourly
chart

GBP/USD
daily
chart

Pound
Sterling
FAQs

The
Pound
Sterling
(GBP)
is
the
oldest
currency
in
the
world
(886
AD)
and
the
official
currency
of
the
United
Kingdom.
It
is
the
fourth
most
traded
unit
for
foreign
exchange
(FX)
in
the
world,
accounting
for
12%
of
all
transactions,
averaging
$630
billion
a
day,
according
to
2022
data.
Its
key
trading
pairs
are
GBP/USD,
aka
‘Cable’,
which
accounts
for
11%
of
FX,
GBP/JPY,
or
the
‘Dragon’
as
it
is
known
by
traders
(3%),
and
EUR/GBP
(2%).
The
Pound
Sterling
is
issued
by
the
Bank
of
England
(BoE).

The
single
most
important
factor
influencing
the
value
of
the
Pound
Sterling
is
monetary
policy
decided
by
the
Bank
of
England.
The
BoE
bases
its
decisions
on
whether
it
has
achieved
its
primary
goal
of
“price
stability”

a
steady
inflation
rate
of
around
2%.
Its
primary
tool
for
achieving
this
is
the
adjustment
of
interest
rates.
When
inflation
is
too
high,
the
BoE
will
try
to
rein
it
in
by
raising
interest
rates,
making
it
more
expensive
for
people
and
businesses
to
access
credit.
This
is
generally
positive
for
GBP,
as
higher
interest
rates
make
the
UK
a
more
attractive
place
for
global
investors
to
park
their
money.
When
inflation
falls
too
low
it
is
a
sign
economic
growth
is
slowing.
In
this
scenario,
the
BoE
will
consider
lowering
interest
rates
to
cheapen
credit
so
businesses
will
borrow
more
to
invest
in
growth-generating
projects.

Data
releases
gauge
the
health
of
the
economy
and
can
impact
the
value
of
the
Pound
Sterling.
Indicators
such
as
GDP,
Manufacturing
and
Services
PMIs,
and
employment
can
all
influence
the
direction
of
the
GBP.
A
strong
economy
is
good
for
Sterling.
Not
only
does
it
attract
more
foreign
investment
but
it
may
encourage
the
BoE
to
put
up
interest
rates,
which
will
directly
strengthen
GBP.
Otherwise,
if
economic
data
is
weak,
the
Pound
Sterling
is
likely
to
fall.

Another
significant
data
release
for
the
Pound
Sterling
is
the
Trade
Balance.
This
indicator
measures
the
difference
between
what
a
country
earns
from
its
exports
and
what
it
spends
on
imports
over
a
given
period.
If
a
country
produces
highly
sought-after
exports,
its
currency
will
benefit
purely
from
the
extra
demand
created
from
foreign
buyers
seeking
to
purchase
these
goods.
Therefore,
a
positive
net
Trade
Balance
strengthens
a
currency
and
vice
versa
for
a
negative
balance.