GBP/USD Continues To Rise Above 1.2650, Focus On US Data & Fed Minutes

GBP/USD is trading in positive territory for the fifth consecutive day at 1.2688 in early Asian trading on Wednesday. The US dollar index (DXY) fell below the 106.00 mark that supports major currency pairs. Investors are awaiting the US ADP employment change for June, the ISM services PMI, and the FOMC minutes, which will be released later on Wednesday.

On Tuesday, Federal Reserve Chairman Jerome Powell said that US inflation has cooled again after moving higher earlier this year. However, he still wants to see more evidence before he has the confidence to start cutting interest rates. Powell added that the US economy and job market remain strong, which means the central bank can take its time to decide when it is appropriate to cut interest rates.

Meanwhile, Chicago Fed President Austan Goolsbee said he saw some “warning signs” of economic weakness, adding that the Fed’s goal is to reduce inflation without putting pressure on the labor market. The CME FedWatch tool showed that traders increased their bets on the Fed starting an easing cycle this year, pricing in a probability of a 25 basis point (bps) rate cut in September at nearly 63%, up from 58% on Monday. This in turn put some selling pressure on the dollar.

On the other hand, GBP/USD was higher despite expectations of an early rate cut from the Bank of England (BOE). Currently, investors expect the BoE to start cutting rates at its upcoming meeting in August. Michael Field, European market strategist at Morningstar, said: “The Monetary Policy Committee is watching the data. The data is clearly moving in the right direction, so a rate cut will have to follow.”

foreign exchange

fxcurrencyconverter is a forex portal. The main columns are exchange rate, knowledge, news, currency and so on.

© 2023 Copyright