During the early Asian trading session on Thursday, the GBP/USD pair encountered selling pressure, slipping to 1.2614 from a daily high of 1.2640. This retreat follows recent hawkish remarks from a US Federal Reserve (Fed) official, reinforcing the central bank‘s commitment to a prolonged period of higher interest rates and signaling a reluctance to rush into rate cuts.
Fed Governor Christopher Waller’s comments on Thursday emphasized the Fed’s cautious approach towards adjusting the benchmark rate. Waller indicated that maintaining the current rate target for an extended period might be necessary to rein in inflation and achieve the 2% target. These remarks bolstered the US dollar to 104.45 against the Japanese yen, consequently weighing on the GBP/USD pair.
Meanwhile, the Bank of England (BoE) opted to keep its interest rate unchanged at 5.25% for the fifth consecutive meeting last week. However, the central bank’s dovish shift in its interest rate outlook has added downward pressure on the British Pound (GBP). BoE Governor Andrew Bailey hinted at the possibility of future interest rate cuts during his recent statements.
Market participants are closely monitoring a speech by BoE’s C. Mann and the final UK Gross Domestic Product (GDP) growth figures for Q4 on Thursday. Any dovish remarks from the BoE policymaker or weaker-than-anticipated GDP data could further exacerbate selling pressure on the GBP. In the US, investors await the release of key economic indicators, including the annualized GDP figure, weekly Initial Jobless Claims, and the Michigan Consumer Sentiment Index later in the day.
