GBP/USD Strengthens Amid US Dollar Selling Pressure
GBP/USD rose more than a third of a percent on Thursday, driven by a weakening US dollar. Investors are increasingly confident that the Fed will begin cutting interest rates several times by the end of the year. The market now awaits the Fed's decision on September 17, followed by the Bank of England (BoE) meeting, which usually doesn't attract as much attention as the Fed's.
US inflation data for August rose again. The headline CPI was recorded at 2.9% annually and 0.4% monthly, indicating that price pressures at the front of the curve remain. These figures reinforce expectations that the Fed has room to ease monetary policy.
Specifically, the shelter and food components are the main drivers of short-term inflation. The grocery price index rose 0.5% in just one month. Meanwhile, the core CPI—which excludes energy and food—also rose 2.9% year-on-year, in line with market expectations.
For GBP/USD, signals of Fed easing tend to weaken the US dollar and support a stronger sterling. However, ahead of the Fed and Bank of England meetings, volatility could remain high as markets adjust their expectations regarding the direction of interest rates at both central banks.
Source: Newsmaker.id
