23 May 2024, GBP/USD
Event to watch out for today:
11:30 GMT+3. GBP - Composite PMI
15:30 GMT+3. USD - Unemployment Claims
16:45 GMT+3. USD - Composite PMI
GBPUSD:
The Pound-Dollar pair continues to rally near 1.2720 during the early Asian session on Thursday. The major pair is boosted by better-than-expected UK CPI inflation data, which lowered bets on a Bank of England (BoE) rate cut in June. Later in the day, flash reports on the UK and US purchasing managers' index (PMI) will be released.
Minutes from the latest Federal Open Market Committee (FOMC) meeting released on Wednesday showed that officials expressed great concern about inflation as it has been more stubborn than expected and will start in 2024, causing the Fed to lack the confidence to move forward with interest rate cuts. Fed Chairman Jerome Powell emphasized last week that the Fed “will have to be patient and let restrictive policy do its job” as inflation remains high. According to CME FedWatch Tool, there is almost a 60% chance that the Fed will go for its first rate cut in September.
On the other hand, U.K. inflation fell less than expected in April, prompting investors to lower expectations for a Bank of England rate cut next month. The country's consumer price index (CPI) rose 2.3% in April, up from 3.2% in March. The figure recorded its lowest level since July 2021, the Office for National Statistics said on Wednesday. The rise in UK CPI inflation is boosting the Pound Sterling (GBP) and creating a tailwind for the GBP/USD pair. Markets reduced the probability of a Bank of England rate cut in June to 18%, down from 50% on Tuesday.
Trading recommendation: Trade predominantly on Buy from the current price level.
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