The GBP/USD pair is trading with a slight positive bias around 1.3075 during Thursday’s Asian session, yet it lacks strong bullish momentum and remains close to a nearly one-month low reached the previous day.
The U.S. Dollar (USD) is consolidating recent gains, hitting its highest level since August 16, buoyed by rising expectations for a standard 25 basis point interest rate cut by the Federal Reserve (Fed) in November. This sentiment was reinforced by the FOMC meeting minutes released on Wednesday, which indicated that the recent substantial rate cut does not commit the Fed to a specific pace for future reductions. Consequently, the yield on the benchmark 10-year U.S. government bond remains elevated above 4%, supporting the dollar and posing a challenge for the GBP/USD pair.
Adding to the pressure on the British Pound (GBP), dovish comments from Bank of England (BoE) Governor Andrew Bailey last week suggested a possible acceleration in the central bank‘s rate-cutting cycle, contributing to the GBP’s relative weakness. Traders are likely to await U.S. consumer inflation data, as well as the Producer Price Index (PPI) on Friday, which may further influence expectations regarding the Fed’s rate-cut path and drive near-term USD demand.
As traders approach key data releases, the BoE Credit Conditions Survey may provide short-term trading opportunities. However, the prevailing fundamental backdrop suggests a downward trajectory for the GBP/USD pair, indicating that any upward movements may still be viewed as selling opportunities. Spot prices appear set to extend their recent decline from the 1.3435 level, which marked the highest point since March 2022.
Related Topics:
