Pound Under Pressure! US Dollar Strengthens, GBP/USD Holds Low
The pound sterling traded cautiously near a four-week low, around 1.3360 against the US dollar, during Friday's European session. The GBP/USD pair came under pressure as the US dollar continued to strengthen. This strengthening was fueled by expectations that the Federal Reserve (Fed) would hold off on easing its monetary policy at its meeting later this month.
The dollar's strength was evident in the US Dollar Index (DXY), which held near a six-week high of 99.50. The market is almost entirely expecting the Fed to maintain interest rates in the 3.50%–3.75% range at its January meeting, according to the CME FedWatch tool. This speculation is reinforced by persistently high US inflation and statements by Fed officials that monetary policy needs to remain tight.
Meanwhile, the pound sterling tended to move neutrally as investors awaited the release of UK employment and inflation data next week. These data will provide important clues to the Bank of England's (BoE) future policy direction. Until further clarity is provided, GBP movements are expected to remain limited and sensitive to the strength of the US dollar. (az)
Source: Newsmaker.id
