07 February 2024, GBP/USD
Events to watch out for today:
15:30 EET. USD - Foreign trade balance
17:30 EET. USD - Crude oil inventory data from the Department of Energy
GBPUSD:
The GBP/USD pair is trading higher amid weakness in the US dollar in the early hours of Asian trading on Wednesday. The recovery of the major pair is supported by a weaker dollar and lower US Treasury bond yields.
Expectations of an interest rate cut by the Federal Reserve (Fed) weakened as US economic data came in better than expected. Fed Chairman Jerome Powell said on Sunday that a rate cut is not appropriate until there is confidence that inflation is moving towards 2 per cent. Markets are now pricing in a 15% chance of a rate cut in March and a 50% chance of a rate cut at the May meeting. This, in turn, is boosting the US Dollar.
The Pound Sterling (GBP) is at risk of a technical recession, which could force Bank of England officials to move to a softening stance on interest rates. Bank of England (BoE) chief economist Hugh Pill said on Monday that the question now for most central bank policymakers is when it would be appropriate to start cutting interest rates. Governor Andrew Bailey said inflation was moving in the right direction and that the Bank of England would keep borrowing costs under control.
Trade recommendation: Predominantly sell order trading
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