The chief economist of the Bank of England supported the pound | 02 May 2024

02 May 2024, GBP/USD

The chief economist of the Bank of England supported the pound

GBPUSD:

The Pound-Dollar pair consolidated near 1.2535 on Thursday during the early Asian session. The rise in the major pair is supported by a sharp decline in the US Dollar (USD) after the US Federal Reserve (Fed) left the interest rate unchanged. As expected, the US central bank kept the benchmark rate in the target range of 5.25%-5.50% at its May meeting on Wednesday, the highest level in more than two decades. The U.S. Fed does not believe it is appropriate to cut the interest rate until the central bank has more confidence that inflation is moving steadily toward the 2% target.

In addition, Fed Chairman Jerome Powell said during a press conference, “I think it is unlikely that the Fed's next move will be to raise rates.” These comments prompted a subdued reaction in the markets, which weighed on the US Dollar and created a tailwind for the GBP/USD pair. According to CME FedWatch, financial markets only see one rate cut in November amid continued high inflation and a strong economy. The central bank also announced that it will now reduce its bond portfolio more slowly. Starting in June, the Fed will reduce its monthly holdings of U.S. Treasury securities from $60 billion to $25 billion.

On the other hand, investors expect the Bank of England (BoE) to reduce borrowing costs at its June or August meetings as BoE Governor Andrew Bailey said he is confident that core inflation will return to 2% in April. However, Bank of England chief economist Hugh Pill warned last week that there is a greater risk of cutting interest rates too soon rather than too late. His remarks provided some support for the Pound Sterling (GBP).

Trading recommendation: Trade predominantly with Buy orders from the current price level.

FreshForex offers a wonderful 300% bonus on every deposit of $100 or more, giving you the opportunity to increase your trading volumes!

David Johnson
Analyst of «FreshForex» company
¿De acuerdo con la revisión?
Opinión de los comerciantes:
Close
Iniciar sesión
Su navegador no admite cookies. Si la cookie está desactivada en su navegador de Internet, es posible que tenga problemas con la representación del área Personal. Cómo habilitar el soporte para cookies.