The Pound Sterling Surges Against the US Dollar
- The Pound Sterling climbs above 1.3250 against the US Dollar following the Fed’s rate cut and expectations of further easing.
- Investors await the BoE policy meeting, anticipating interest rates to remain unchanged at 5%.
- UK’s services inflation in August supports the case for the BoE to hold rates steady.
The Pound Sterling (GBP) strengthens above 1.3250 against the US Dollar as the Fed’s rate cut leads to a Dollar decline amid speculation of deeper easing cycles. The US Dollar Index (DXY) retreats from a recent high of 101.50, tracking its value against major currencies.
Fed Rate Cut and Economic Outlook
The Federal Reserve implemented a 50-basis points interest rate reduction, signaling confidence in inflation reaching the 2% target and concerns over labor market conditions. Fed Chair Jerome Powell reassured no imminent recession, citing solid growth, decreasing inflation, and a robust labor market.
- Forecast: Fed funds rate to reach 4.4% by year-end.
- Market Probability: 65.6% for a 25 bps cut in November, higher for a 50 bps cut.
Citi analysts predict another 50 bps rate reduction in November, with Powell’s commitment to stay proactive in rate adjustments. Risks lean towards quicker labor market softening and aggressive rate cuts.
Market Focus: Initial Jobless Claims Data
Thursday’s US session highlights the Initial Jobless Claims for the week ending September 13, with expectations of stability around 230K individuals filing for benefits.
Market Movers: Pound Sterling towards 1.3300 against US Dollar
- Pound Sterling rebounds from intraday losses post-Fed’s announcement, surpassing 1.3200 against the US Dollar.
- BoE expected to maintain 5% interest rates amid concerns over inflation sustainability.
- UK CPI data shows core inflation at 3.6% and rising services inflation at 5.6%.
- Investors await BoE guidance for potential future rate cuts.
Technical Analysis: Pound Sterling Stability
Pound Sterling nears 1.3300 against the US Dollar in European trading, holding above the 20-day EMA near 1.3100. The GBP/USD pair remains firm, supported by the RSI above 60.00, indicating potential bullish momentum. Resistance levels at 1.3266 and 1.3500, with crucial support at 1.3000.