The GBP/USD pair experienced a significant decline on Wednesday, reaching a new weekly low of 1.2719, down 0.33%. This drop was largely attributed to the continued increase in US Treasury bond yields, which influenced traders’ expectations of rate cuts. Federal Reserve officials also took a cautious approach, leading traders to anticipate only a 25 basis point rate cut by the end of 2024.
As the Pound Sterling corrected further against the US Dollar, it reached 1.2740 during Wednesday’s American session. This correction came after the GBP/USD pair hit a fresh 10-week high at 1.2800 the day before. The softening inflation outlook in the UK, combined with the strengthening US Dollar, contributed to the stall in the rally for the Pound Sterling.
During the Asian session on Wednesday, the GBP/USD pair saw mild losses above 1.2750 as the US Dollar rebounded. This rebound was driven by the recovery of US yields and diminishing expectations of a rate cut by the Federal Reserve in September. Additionally, the Fed’s Beige Book release and a speech by Fed’s John Williams were anticipated to have an impact on the pair’s movement.
Overall, the GBP/USD pair faced downward pressure as US Treasury bond yields continued to rise and traders adjusted their expectations of rate cuts. The UK’s inflation outlook also played a role in the correction of the Pound Sterling against the US Dollar. The ongoing developments surrounding the Federal Reserve’s decisions and statements from key officials were closely monitored by traders for insight into future movements of the major pair.
With the Pound Sterling falling to a new weekly low against the Greenback and the US Dollar rebounding, the GBP/USD pair faced challenges in maintaining its recent gains. As investors awaited the release of the Fed’s Beige Book and monitored statements from key officials, the future direction of the pair remained uncertain. The continued volatility in the foreign exchange market added to the uncertainty surrounding the GBP/USD pair’s outlook in the near term.
