US Dollar gains as Pound Sterling drops to 1.3230 against USD, experts predict 2.7% core PCE inflation
The Pound Sterling (GBP) weakens from a 2-year high of 1.3266 against the US Dollar (USD) in London’s session. GBP/USD pair declines as USD gains ground, with focus on US core PCE data for July. US Dollar Index (DXY) shows buying interest after hitting YTD low at 100.50.
Despite recovery, USD outlook remains bearish with expectations of Fed interest rate cut in September. Debate on size of rate cut continues, with 34.5% probability for 50 bps cut.
Economists anticipate core PCE inflation to rise to 2.7%, impacting Fed’s rate cut decision. Signs of inflation persistence may reduce chances of large rate cut.
Market movers: Pound Sterling awaits BoE Mann speech for interest rate cues
- GBP shows mixed performance against major peers, expected to trade sideways as investors await BoE interest rate path signals.
- BoE cut rates to 5% in August, signaling slower reduction path due to UK’s stable economy.
- Investors await Catherine Mann’s speech for insights on BoE’s rate cut plan and economic outlook.
- UK PM’s budget comments improve GBP’s appeal, hinting at tax burden increase on higher incomes.
Technical Analysis: Pound Sterling holds key support at 1.3200
GBP corrects after hitting 2.5-year high against USD, remaining firm with bullish momentum. Upside target at 1.3640 with strong support at 1.3000.
RSI suggests strong upside momentum but nearing overbought levels. Support at 1.3000 crucial for GBP bulls.
Pound Sterling FAQs
- Pound Sterling (GBP) is the oldest currency, accounting for 12% of global FX transactions.
- BoE’s monetary policy decisions heavily influence GBP value based on inflation targets.
- Economic indicators like GDP, PMIs, and trade balance impact GBP direction.
- Trade balance data releases affect GBP strength based on export-import differentials.