28 August 2024, GBP/USD
GBPUSD:
GBP/USD tested a fresh multi-year high on Tuesday, but then slid to a 29-month peak of 1.3270 as the Pound continues to gain ground on a wave of US Dollar sell-offs. Investors have been gripped by hopes of a September rate cut by the Federal Reserve (Fed), with US Personal Consumption Expenditure (PCE) inflation data not released until Friday, leaving markets with little meaningful data to chew on until then.
Fed Chairman Jerome Powell all but confirmed that the central bank will move into a rate-cutting cycle on 18 September during a speech at the Jackson Hole Economic Symposium last Friday, sending market appetite to a ceiling.
There is little of note on the UK economic calendar and Wednesday promises to be a quiet session on both sides of the Atlantic. At the start of the US session, traders will be watching for a speech from Federal Reserve Board of Governors member Christopher Waller, while central bank watchers will be keeping an eye on Bank of England (BoE) Governor Catherine Mann's speech after the London markets close.
Mixed US house price data for June gave investors little to ponder. The house price index for the month from the Federal Housing Finance Agency fell -0.1 per cent from May's 0.0 per cent reading. Markets had expected the index to come in at 0.2%. The S&P/Case-Shiller home price index, meanwhile, rose 6.5% from a year earlier, less than the revised 6.9% but still more than the 6.0% expected.
US Gross Domestic Product (GDP) data for Q2 will be released on Thursday and is expected to remain at 2.8% year-over-year. However, the key data this week will be Friday's Personal Consumption Expenditure (PCE) price index data for July, which is expected to increase year-on-year to 2.7% from 2.6% and remain at 0.2% month-on-month. Market participants, who have not given up hope for a rate cut, will expect the inflation data to come in below expectations, while the above-forecast data may trigger a new burst of optimism among risk-averse investors.
Trading recommendation: Watch the level of 1.3290, if the level is fixed above, we take Buy positions, if the level rebounds, we take Sell positions.
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