The GBP/USD pair has seen a decline to 1.2695 amid a stronger US Dollar (USD) on Thursday. The increase in US yields and the reduced expectations of a Federal Reserve (Fed) rate cut in September have contributed to the firmer USD. Fed officials have expressed caution regarding the inflation outlook, causing traders to adjust their expectations for monetary policy easing this year.
Investors are eagerly anticipating the release of the US Q1 GDP estimate, which is predicted to show a growth of 1.3% on Thursday. A favorable GDP reading could further bolster the USD and pose challenges for the GBP/USD pair. The combination of the Fed’s cautious stance and solid US economic data has provided some support for the Greenback in recent trading sessions.
Upcoming Economic Data Releases
Aside from the US Q1 GDP estimate, traders will also be focusing on other economic indicators such as the weekly Initial Jobless Claims, Goods Trade Balance, and Pending Home Sales figures. Moreover, speeches by key Fed officials including Raphael Bostic, John Williams, and Lorie Logan could offer additional insights into the central bank’s monetary policy outlook.
On the British front, concerns have arisen over the Bank of England’s (BoE) potential decision to lower interest rates at its August meeting due to a softer UK inflation outlook. The International Monetary Fund (IMF) has even projected two to three rate cuts from the BoE. With limited economic data releases from the UK, political uncertainty surrounding the upcoming elections may influence the performance of the Pound Sterling (GBP).
The GBP/USD pair faces challenges from the current strength of the US Dollar and uncertainties surrounding both US and UK economic data. Traders will closely monitor key economic indicators and central bank announcements to gauge the future direction of the currency pair.
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