GBP/USD floats around 1.3320 as softer US CPI reinforces Fed cut bets
GBP/USD pares some of last Friday’s losses and edges up moderately on Monday as the latest US inflation report might not deter the Federal Reserve (Fed) from cutting rates this week. At the time of writing, the pair trades at 1.3319, up 0.07%.
Sterling finds support from improved risk mood ahead of Trump–Xi meeting
The US Consumer Price Index (CPI) in headline and core prints was 3% YoY, slightly below estimates of 3.1% amid the lack of economic data releases due to the US government shutdown.
Optimism amongst investors that the US-China trade war could de-escalate pushed high beta currencies, like Sterling, higher. This week, US President Donald Trump and Chinese President Xi Jinping will meet in South Korea by the end of the week.
Across the pond, the UK’s inflation eased, prompting investors to increase bets that the Bank of England (BoE) could cut rates at its December meeting, up to 67% from 50% a week ago.
Analysts mentioned by Reuters stated that “Fiscal events remain the dominant factor for the Pound in the medium term, and we stand by our view that the bar for a positive outcome for Sterling is not particularly high.”
Regarding the UK’s Autumn Budget, investors had priced in that Chancellor Rachel Reeves will raise tens of billions of Sterling in taxes to meet her fiscal targets, once she announces the plan on November 26.
Source: Fxstreet
