21 May 2024, GBP/USD
GBPUSD:
The Pound-Dollar pair continues to rally near 1.2710 on Tuesday in the early Asian session. Investors are expecting more catalysts as various Federal Reserve (Fed) speakers are due later in the day. On Wednesday, close attention will be focused on UK Consumer Price Index (CPI) data and FOMC meeting minutes.
On Tuesday, the US dollar trades stable amid the absence of important economic data from the US and the UK. Fed officials remain cautious about the timing of the end of the easing cycle and emphasize the need to hold rates longer to gain confidence that inflation is moving towards target. The minutes from Wednesday's FOMC meeting will take center stage as they may provide some clues as to the future path of interest rates.
On Monday, Fed Vice Chairman Michael Barr said the central bank “needs to give our restrictive rate path some more time to continue its work.” Meanwhile, Fed policymaker Philip Jefferson, another permanent voting member of the Fed's rate-setting committee, said inflation continues to fall, though not as fast as he expected. The Fed is expected to leave rates unchanged at its next meeting in June. Financial markets believe there is a 76% chance of a 25 basis point (bps) rate cut in September and two rate cuts before the end of the year, according to the CME FedWatch Tool. The US Fed's wait-and-see stance is likely to lead to a US Dollar (USD) rate hike and could limit the pair's near-term growth.
Trading recommendation: Watch the level of 1.2720, on the rebound take Sell positions.
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