- GBP/USD traded in a range of 1.1820-1.1900 following Powell’s Fed speech.
- The tone of Fed Powell’s speech was hawkish but cautious, trying not to derail the markets.
- GBP/USD Price Analysis: Raised towards 1.1900 as Powell finished his speech, but has erased those gains.
The GBP/USD reels as Fed Chairman Powell takes the dais at the Jackson Hole Symposium. During the day GBP/USD bounced from a daily low at 1.1775 and rallied strongly to a fresh daily high at 1.1900. However, as Powell finished his speech, GBP/USD pulled back from daily highs towards the 1.1820 area. At the time of writing, GBP/USD is trading volatile, around the 1.1800-1.1810 zone.
Fed Powell Comments
In his speech, Jerome Powell said that the central bank is moving “on purpose” to a sufficiently restrictive level to return inflation to 2%, while adding that restoring price stability will take some time, requiring a use ” forceful” of the central bank’s tools.
Powell added that the fed funds rate at a neutral long-term estimate of 2.25%-2.50% “is not a place to stop or pause.” He noted that the US central bank will depend on the data for the September meeting. Although he mentioned that the Fed will slow the pace of rate hikes, he stressed that restoring price stability would require maintaining a restrictive policy for “some time.”
Following Jerome Powell’s remarks, money market futures odds of a 75 basis point Fed rate hike decreased to 56.5% from 46.5% prior to the speech. Meanwhile, the US Dollar Index recovered some ground after hitting a low of 107,588, recovering the 108,000 figure, but remains below its opening price.
At the same time, in its final reading, the University of Michigan Consumer Sentiment came in at 58.2 vs. forecasts of 55.2. Earlier on Friday, the Fed’s favorite measure of inflation rose 0.1%m/m vs. 0.3% expected, while in annual terms core PCE slowed to 4.6% from 4.7%.
Technical levels
Source: Fx Street
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