The Pound Sterling faced pressure near 1.3400 against the US Dollar, with the US Dollar’s outlook remaining vulnerable. BoE Governor Andrew Bailey mentioned a gradual decline in interest rates, and investors are awaiting the US PCE inflation data for August for fresh clues on the Fed’s interest rate prospects.
In Wednesday’s London session, the GBP/USD pair dropped from the crucial resistance of 1.2400 against the US Dollar as the Greenback showed a minor recovery from its yearly low. The US Dollar Index (DXY) experienced a mild recovery from 100.20, as the Federal Reserve (Fed) is expected to deliver more interest rate cuts in the remaining two policy meetings of the year. The Fed started the policy-easing cycle with a 50-basis points reduction in interest rates last week, with expectations of further reductions by 75 bps in the rest of the year.
Investors are closely watching the US core PCE inflation data for August, which will be released on Friday. The Fed’s preferred inflation gauge is anticipated to show an acceleration in the core annual inflation measure to 2.7% from 2.6% in July. The likelihood of a double rate cut of 50 bps in November has increased to 59%, as per the 30-day Federal fund futures pricing data, reflecting expectations of further interest rate cuts by the Fed.
The Pound Sterling displayed a mixed performance against major peers on Wednesday, with the outlook remaining firm amid expectations of gradual interest rate cuts by the Bank of England (BoE). BoE Governor Andrew Bailey expressed confidence in inflation sustainably returning to the bank’s target of 2%, with the annual headline inflation in the UK hovering near the target in the last three months. BoE policymaker Megan Greene also emphasized the need for gradual interest rate cuts in light of inflation indicators showing persistent price pressures moving in the right direction.
In terms of British Pound (GBP) performance against major currencies today, GBP was strongest against the Japanese Yen, despite showing mixed results against the US Dollar, Euro, Canadian Dollar, Australian Dollar, New Zealand Dollar, and Swiss Franc. The technical analysis revealed that the Pound Sterling struggled to hold gains near 1.3400 against the US Dollar in European trading hours, with all short-to-long-term Exponential Moving Averages (EMAs) sloping higher. The 14-day Relative Strength Index (RSI) suggested active bullish momentum, with resistance seen near 1.3500 and crucial support at 1.3000.
In conclusion, the Pound Sterling faces pressure against the US Dollar, while the US Dollar’s outlook remains vulnerable. BoE Governor Bailey anticipates gradual interest rate declines, with investors awaiting the US PCE inflation data for August for insights into the Fed’s interest rate prospects. The GBP/USD pair dropped from the crucial resistance of 1.2400 against the US Dollar, with expectations of further interest rate cuts by the Fed. The Pound Sterling’s outlook remains firm amid expectations of gradual interest rate cuts by the BoE, with confidence in inflation returning to the bank’s target of 2%. Technical analysis indicates resistance near 1.3500 and crucial support at 1.3000 for the Pound Sterling.
