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Aug 09 - 11:55 AM

GBP/USD - COMMENT-Sterling Steadies Near Trend Low, Awaiting Key US, UK Inflation Data

By Paul Spirgel  —  Aug 09 - 10:05 AM

GBP/USD continues to tread water near trend lows in the low 1.27's, caught between Monday's 1.2689 low and multiple daily highs in the 1.2780's as traders await key U.S. inflation on August 10, and UK CPI on August 16.
Indeed, traders appear to be seeking more clarity on central bank policy before placing bets on near-term GBP/USD moves.

Despite the pound's recent slide from its July 13, 2023 high at 1.3144 to current levels, sterling remains the top performing major currency at 5.32%.

Sterling bulls remain focused on the BoE's near-term rate path which is decidedly more hawkish than the Fed or the ECB.

Rate futures, as indicated by Eikon's IRPR page, show the BoE is expected to hike an additional 52bps by its February 1, 2024 MPC meeting, while a Fed 25bp cut has a near-80% chance by the March 20, 2024 FOMC meeting, and the ECB is seen hiking once more by its January 2024 meeting before cutting rates in July.

While the BoE is expected to begin cutting rates in Q4 2024, UK rates 0#SON3: will have a significant advantage over the U.S. 0#SRA: and euro zone 0#FEI: over the next several years which, barring a significant drop in UK inflation, should keep GBP/USD relatively well bid.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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