GBP/USD Holds Strong, Investors Await US Inflation Data
Newsmaker.id - The pound strengthened against the US dollar on Friday (July 10th), bringing the GBP/USD pair towards the 1.3450 range. This position continues sterling's recovery after hitting a seven-month low at the end of June.
The pound's strengthening was primarily supported by a weakening US dollar and easing global oil prices. This situation benefits the UK, which is heavily dependent on energy imports, as lower oil prices can help reduce domestic cost pressures and inflation.
Sterling has recovered more than 2% from its low and is approaching a four-week high. However, this gain remains overshadowed by political uncertainty in the UK after the resignation of Prime Minister Keir Starmer increased volatility in the currency market.
From a monetary perspective, the market now estimates a lower chance of a Bank of England interest rate hike than previously. Investors are only pricing in one rate hike, while the chance of a second hike is estimated at around 25%, down from the previous projection of up to three hikes.
Going forward, the direction of GBP/USD will depend heavily on dollar movements and US inflation data. Higher-than-expected CPI data could reinforce expectations of a Fed rate hike and put pressure on the pound, while lower inflation could potentially open room for GBP/USD to continue strengthening. (CP)
