Longer-term inflation expectations | 30 August 2021

30 August 2021, GBP/USD

Longer-term inflation expectations

GBPUSD trading plan:

U.S. Federal Reserve Chair Jerome Powell said he remains unconvinced that current high inflation readings will turn out to be permanent, pushing back against a growing number of his more hawkish colleagues publicly fretting about price pressures. Policymakers and analysts generally believe that, as long as longer-term inflation expectations remain anchored, policy can and should look through temporary swings in inflation. Longer-term inflation expectations have moved much less than actual inflation or near-term expectations, suggesting that households, businesses, and market participants also believe that current high inflation readings are likely to prove transitory and that, in any case, the Fed will keep inflation close to our 2 percent objective over time.

Investment idea: buy 1.3750 and take profit 1.3814.

David Johnson
Analyst of «FreshForex» company
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