- The pound finds buyers at 1.3665 after a daily drop of 0.75%.
- The British pound suffers against a stronger USD.
- GBP / USD’s reaction to the BoE is unpredictable – MUFG.
The GBP is trying to find support at the lows of 1.3665 in late Friday US trading, after falling more than 0.7% on the day. The month-end moves with the November Federal Reserve meeting just around the corner have boosted the US dollar across the board.
The USD soars on expectations of an aggressive statement from the Fed
The pair GBP/USD it fell sharply on Friday, weighed down by the widespread strength of the US dollar in a combination of moderate risk aversion and heightened expectations of an aggressive turn by the Federal Reserve next week.
Macroeconomic data from the US may have encouraged investors to close short US dollar positions, especially after core personal consumption expenditures, the Fed’s preferred indicator of inflation, accelerated 3.6% year-on-year in September. . These figures reaffirm the idea that the central bank will be forced to accelerate its monetary normalization plan, which has favored the US dollar.
Higher inflation expectations have also raised US Treasury yields, increasing the bullish traction on the USD.
Still, investors are bracing for an eventful week ahead, with the Bank of England and Federal Reserve meetings scheduled. The Federal Reserve is expected to announce the end of its monetary stimulus, while, according to some market sources, the Bank of England could raise interest rates for the first time in three years to cope with inflationary pressures.
GBP / USD’s reaction to the BoE is unpredictable – MUFG
MUFG currency analysts believe that the Bank of England could raise rates by 0.15% next week, although they warn of a negative reaction from the British pound: “Based on the recent response of currencies to the bank’s guidance Central, we may well see the British pound discard this slower tightening guide in the future. However, we would expect the British pound to weaken ultimately due to a 15bp rise and guidance suggesting the need for a tightening. less stringent than currently quoted. That message may not be explicit, but it should be implicit in MPR’s forecasts. “
Technical levels
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