- GBP/USD starts the week in the positive, gaining 0.23%.
- BoE Mann commented that the movements of 0.50% reduce the risks of internal inflation.
- The Fed’s Waller and Bostics supported 75 basis points in July and both reiterated the Fed’s commitment to reining in inflation.
the pound sterling is paring some of Friday’s losses, though tilting lower after printing a daily high around 1.2279, but still gaining around 0.12% amid a illiquid session due to a US holiday . The GBP/USD trades at 1.2252 at the time of writing this report.
The weakness of the dollar drives the pound
Sentiment is positive, as evidenced by the European stock and US futures markets. On Monday, GBP/USD opened near the 1.2210 area and although it hit a daily low around 1.2200, it bounced back slightly above the daily pivot point amid lack of economic data between the UK and the United States. Meanwhile, the US Dollar Index, a gauge of the dollar’s value against a basket of rivals, is down 0.29% and currently stands at 104,351, a tailwind for GBP/USD.
Officials from the Bank of England and the Federal Reserve will give statements
However, once both central banks – the Fed and the BoE – held their monetary policy meetings, members of both banks began to give statements.
First, one of the dissidents on Thursday’s BoE decision, Catherine Mann, said moves of 50 basis points reduce domestic inflation risks, fueled by a weaker pound. Mann said the BoE should raise rates faster because the pound’s weak value is adding to inflationary pressures. Mann added that inflation is becoming more entrenched and persistent.
In the United States, Federal Reserve Governor Christopher Waller said he would support a 75 basis point hike in July if the data is what he expects, reiterating that the central bank is determined to restore price stability. Similarly, Atlanta Fed President Raphael Bostic said he was supportive of last week’s 0.75% hike and said the Fed must act decisively and affirmatively to control inflation.
On the other hand, the president of the Cleveland Fed, Loretta Mester, affirmed that it will take “a couple” of years for inflation to return to 2%.
In the week ahead, the UK economic docket will include BoE Chief Economist Huw Pill and CBI Industrial Trend Orders for June. Across the pond, May Existing Home Sales along with Fed Spokesman Thomas Barking will entertain GBP/USD traders.
Technical levels
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
