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May 30 - 11:55 AM

GBP/USD - COMMENT-Sterling Gain After US GDP Tempered Ahead Of Friday's PCE Price Data

By Paul Spirgel  —  May 30 - 10:05 AM

GBP/USD added to European session gains, strengthening to a NorAm session high at 1.2735 after Q1 U.S. GDP and PCE data hinted at a weakening U.S. economy, pushing interest rates lower across the curve, though further gains may be tempered as markets await PCE price data for April on Friday.

Despite its slide from Tuesday's 9-week high at 1.2801, the pound remains relatively close to recent peaks by the March 21 high at 1.2803 and the 2024 high at 1.2894 struck on March 8, as BoE rate cut expectations after the recent dovish BoE hold fade.

Sterling's recent leg higher comes after above-forecast UK CPI on May 22 diminished near-term rate expectations for monetary easing, with June cut odds disappearing almost entirely from near 80% in early May and chances for an August move falling to around 50%.

With a dearth of significant UK data in the near-term GBP traders focus will be on U.S. and euro zone inflation data on Friday and U.S. payrolls next week.

Should inflation and employment remain hot, it is unlikely the Fed or BoE will move to cut rates early, which should keep GBP/USD anchored in its recent 1.2645-1.2801 range.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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