GBP/USD continues its upward momentum for the second consecutive day, bouncing back from a three-week low to reach the mid-1.3100s during the Asian session. The surge in price is fueled by the weakened US Dollar, as the USD Index drops to a one-week low on expectations of a larger interest rate cut by the Federal Reserve.
With the US Treasury bond yields near a 2024 low and a positive market sentiment, the safe-haven USD is under pressure, benefiting the GBP/USD pair. Despite concerns over potential rate cuts by the Bank of England following slowing UK wage growth and flat GDP data, market expectations suggest that the BoE will be less aggressive than the Fed in policy changes over the next year.
As investors await the upcoming Fed and BoE meetings next week, where key policy decisions will be announced, the GBP/USD pair may experience volatility. The outcome of these meetings will likely determine the direction of the currency pair in the near term.
Overall, the dovish Fed stance, coupled with expectations of a more conservative approach by the BoE, has boosted the GBP/USD pair and could have significant implications for investors and traders in the forex market.