GBP/USD remains below 1.2800 ahead of second testimony by Fed’s Powell

July 10, 2024 4:25 am

  • GBP/USD struggles as the US Dollar improves due to the cautious stance of Fed Chair Powell.
  • Fed Chair Powell stated, “First-quarter data did not support the greater confidence in the inflation path.”
  • BoE policymaker Jonathan Haskel stressed maintaining steady interest rates until there is greater certainty that inflationary pressures have subsided.

GBP/USD remains tepid for the second consecutive day, trading around 1.2780 during the Asian session on Wednesday. The decline of the GBP/USD pair can be attributed to the strengthening US Dollar (USD), which has gained momentum following Federal Reserve Chairman Jerome Powell’s testimony before the US Congress on Tuesday. Powell acknowledged improving inflation data but reiterated the Fed’s cautious stance.

Fed Chair Jerome Powell stated, “More good data would strengthen our confidence in inflation.” Powell emphasized that a “policy rate cut is inappropriate until the Fed gains greater confidence that inflation is headed sustainably toward 2%.” He also noted that “first-quarter data did not support the greater confidence in the inflation path that the Fed needs to cut rates.”

Traders anticipate the second semi-annual testimony by Fed Chair Jerome Powell and speeches by the Fed’s Michelle Bowman and Austan Goolsbee on Wednesday. Additionally, attention will be on the US Consumer Price Index (CPI) data, set to be released on Thursday.

In the United Kingdom (UK), Bank of England (BoE) policymaker Jonathan Haskel has recommended maintaining current interest rates due to persistent price pressures in the job market. Haskel emphasized, “I prefer to keep rates steady until we see more assurance that underlying inflationary pressures have truly diminished,” according to Reuters.

The Pound Sterling (GBP) has shown subdued movement against major currencies as attention turns toward upcoming economic indicators. Specifically, investors are anticipating the release of the UK’s monthly Gross Domestic Product (GDP) and May’s factory data, scheduled for publication on Thursday.

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