Pound Under Pressure, US Dollar Strengthens Ahead of US Inflation Data
The pound sterling (GBP) exchange rate against the US dollar (USD) has continued to weaken for the fifth consecutive day and is now trading around 1.3340 in the Asian session on Thursday (October 23rd) morning. Pressure on the pound increased due to the strengthening of the US dollar amid growing market concerns ahead of the release of US inflation data on Friday. This situation was exacerbated by the partial US government shutdown, which delayed the release of important economic data, making investors more cautious.
The US dollar also received additional support from growing optimism regarding a potential trade deal between the US and China. President Donald Trump said he hopes to reach "some agreement" with President Xi Jinping when they meet in South Korea next week, including discussions on soybean exports, nuclear weapons restrictions, and China's purchases of Russian oil. Meanwhile, market participants estimate a 97% chance of a Fed interest rate cut in October and a 96% chance of a December interest rate cut, as pressure on the US economy increases.
The pound itself was hit by the release of UK inflation data for September, which showed an annual increase of 3.8%, lower than the 4% expected. While still well above the Bank of England's 2% target, this figure indicated signs of price slowdown, thus reducing market expectations that the Bank of England would raise interest rates again. The combination of weak data and the strength of the US dollar kept the GBP/USD pair under pressure. (az)
Source: Newsmaker.id
