As the Greenback weakened on Thursday, GBP/USD surged back above the 1.3100 level following a mid-week dip below 1.3000. The US Producer Price Index (PPI) inflation figures, although in line with expectations, failed to provide a clear outlook on US price growth factors, keeping hopes for a Federal Reserve (Fed) rate cut intact.
Forex Today: FOMC Meeting Impasse Expected
Friday’s agenda includes mid-tier Consumer Inflation Expectations from the UK and the US Michigan Consumer Sentiment Index for September. Market participants are awaiting further data before the upcoming Fed rate decision next week.
US PPI data for August showed a 0.2% increase in MoM, with core PPI rising by 0.3% MoM. Annualized PPI figures revealed a slight easing, with headline PPI at 1.7% YoY and core PPI at 2.4% YoY. Additionally, US Initial Jobless Claims for the week ended September 6 matched expectations at 230K.
With subdued inflation and stable jobless claims, expectations for a 25 bps Fed rate cut on September 18 remain high. Rate markets indicate an 80% likelihood of a quarter-point cut next week, with expectations of a total of four cuts by December.
GBP/USD Price Forecast
GBP/USD capitalized on the Greenback’s weakness, reclaiming the 1.3100 level after hovering below it earlier in the week. The pair remains bullish, trading above the 50-day Exponential Moving Average (EMA) at 1.2970, with resistance near 1.3250 and support at 1.2757.
GBP/USD Daily Chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency, accounting for a significant portion of global FX transactions. Its value is influenced by the Bank of England’s monetary policy decisions and economic indicators such as GDP, PMIs, and trade balance. Strong economic data and positive monetary policy stance strengthen the GBP, while weak data can lead to depreciation.