Pound Weakens, Dollar Strengthens Ahead of US Inflation Data
The pound sterling weakened slightly against the US dollar during Wednesday's trading (August 12), with the GBP/USD pair hovering around the 1.3500 level. Pressure mounted as the dollar regained strength ahead of the release of US inflation data, which is expected to be a crucial determinant of the Federal Reserve's policy direction.
Market opinion remains divided regarding the likelihood of an interest rate hike in September. After the Fed held rates steady in July, investors are now awaiting the Consumer Price Index (CPI) figures to see if inflationary pressures remain strong enough to drive a more hawkish policy stance.
Rising oil prices remain a factor keeping inflation concerns elevated. However, the probability of a 25-basis-point rate hike in September actually dipped slightly to around 48%, down from approximately 52% the previous day.
The US dollar also found support amidst geopolitical uncertainty. Sentiment had briefly improved after Pakistan's Defense Minister indicated that the US and Iran were nearing an agreement regarding the Strait of Hormuz, alongside reports of progress in talks between Iran and Oman.
That optimism subsequently faded after US President Donald Trump hardened his stance again, demanding that Iran pay compensation for various attacks linked to Tehran. His statement renewed investor caution and bolstered demand for the dollar.
Newsmaker Analysis: The GBP/USD pair remains sensitive to two key factors: the dollar's trajectory and the US CPI results. If inflation comes in hotter than expected, the likelihood of a Fed rate hike could rise, putting further downward pressure on the pound. Conversely, a lower-than-expected CPI reading could weaken the dollar and pave the way for a rebound in the GBP/USD exchange rate. (asd)
Source: Newsmaker.id
