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Apr 01 - 11:55 AM

GBP/USD - COMMENT-Lower BoE Rate Outlook Keeps Sterling Anchored By Trend Lows

By Paul Spirgel  —  Apr 01 - 10:05 AM

No joy for sterling bulls as the pair remained anchored near trend lows, -0.2% at 1.2595 in Monday trading, just above its 200-DMA by 1.2589 as bears continue to pressure GBP/USD lower amid less-hawkish BoE rate expectations, while Fed members tout a high for longer rate outlook.

The pound has been hurt by the recent BoE rate decision in which two MPC members softened their policy stance from hiking to holding rates steady, in line with the majority, and by falling UK CPI and PPI, which has brought forward UK rate cut expectations, on par with the Fed and ECB for June.

Fed Chair Jerome Powell recently said that the Fed is in no rush to cut rates, supporting recent hawkish comments by Governor Christopher Waller, which has pushed the dollar higher as early 2024 dovish U.S. rate expectations have unraveled significantly.

LSEG's IRPR rate cut indications have dwindled from near -160bp in early January to -75bp currently.

Traders will scrutinize Fed speakers on Tuesday, Wednesday and Thursday for indications of how widespread the less-dovish sentiment has spread throughout the FOMC.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary

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