Cable remains within choppy and narrowing range on Thursday, despite strong UK inflation and labor data, as well as dovish tone from Fed’s chief Powell.
Improving conditions in the UK labor sector suggest that economic recovery is gaining pace, with expectations of lifting almost all Covid-19 restrictions on July 19, expected to further boost the sentiment.
The inflation in the UK rose in June to the highest since August 2018, adding to signals that the BoE may take an action earlier than expected, although the central bank would assess if inflationary pressure is transitory, before calling on raising interest rates and start tightening money supply to the economy. Read more…
No rush – that has been the message from central banks on both sides of the Atlantic, which has been providing negative for cable. Four days before “Freedom Day,” sterling has another reason to struggle as covid cases surge.
Federal Reserve Chair Jerome Powell said the US economy is still “a ways off” to a level that warrants tapering down the bank’s bond-buying scheme. Moreover, Powell insisted that rising prices are reopening-related, and thus temporary – even as he acknowledged they could persist for a few months. US consumer prices are up 5.4% YoY in June and producer prices leaped 1% last month. All these recent figures beat estimates. Read more…
The GBP/USD pair shot to the 1.3900 neighbourhood, or fresh daily tops in the last hour, albeit quickly retreated few pips thereafter. The pair was last seen trading just above mid-1.3800s, nearly unchanged for the day.
Following an early dip to the 1.3815-10 region, the GBP/USD pair witnessed a dramatic turnaround on Thursday and rallied back closer to the top end of its weekly trading range. The strong intraday rally of around 85 pips was sponsored by hawkish comments by the BoE policymaker, Michael Saunders. During a scheduled speech at an online event, Saunders said that the question of whether to curtail our current asset purchase program earlier will be under consideration at our forthcoming meetings. Read more…
