29 August 2024, GBP/USD
Events to watch out for today:
15:30 GMT+3. USD - GDP volume change for the quarter
GBPUSD:
The GBP/USD pair is back to the 29-month high set on Tuesday at 1.3266. The pair is being helped by renewed selling in the US Dollar despite the prevalence of risk-off-oriented flows following disappointing guidance from US AI titan Nvidia.
The diverging monetary policy outlook between the US Federal Reserve (Fed) and the Bank of England (BoE) also remains in favor of the GBP/USD uptrend.
ECB Governing Council member Klaas Knot said on Wednesday that he is waiting for more information before deciding whether to support an interest rate cut in September. Nevertheless, markets expect the ECB to cut borrowing costs next month amid easing price pressures and an uncertain economic outlook.
Stronger-than-forecast economic data in recent months and optimism about the new Labor government are supporting the British pound. Comments from Bank of England (BoE) Governor Andrew Bailey also support the British Pound. Bailey stated that “policy should remain restrictive for long enough until the risks of inflation holding steady around the 2% target over the medium term dissipate. Therefore, the exchange rate will be sustainable.” According to a Reuters poll, economists expect another 25 basis points (bps) rate cut from the Bank of England this year
Trading recommendation: Trade mainly with buy orders at the price level of 1.3220. Consider sell orders at the price level of 1.3170.
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