The GBP/USD currency pair shows modest upward movement, trading around the 1.3075 level during the Asian session on Thursday. However, this increase lacks strong bullish support and comes just above a nearly month-low hit the previous day. The US Dollar continues to consolidate its gains, reaching its highest point since mid-August, fueled by increasing likelihood of a 25 basis points interest rate cut by the Federal Reserve in November. Insights from the recent FOMC meeting minutes indicated a consensus that such a substantial cut would not commit the central bank to a rigid pace for future reductions. This situation has kept the yield on the benchmark 10-year US government bond above 4%, marking its highest level since late July, which further supports the dollar and poses challenges for the GBP/USD exchange rate.
Additionally, remarks from the Bank of England (BoE) suggest a potential acceleration in its rate-cutting cycle, influencing the relative weakness of the British Pound. Such sentiments have exerted downward pressure on GBP, limiting the potential for significant gains in the GBP/USD pairing. Traders are also cautious and seem to be awaiting upcoming US consumer inflation data, as well as Friday’s Producer Price Index (PPI) report. These economic indicators are expected to shape expectations regarding the Fed’s future rate cuts, which will likely impact the demand for the dollar in the short term.
As market participants approach these crucial data releases, they may look for short-term trading opportunities stemming from the BoE’s Credit Conditions Survey. Nonetheless, the existing economic framework indicates a stronger likelihood of downward movement for the GBP/USD pair, suggesting that any increase may be viewed as a chance to sell. Current price patterns indicate a continuation of the recent decline from the 1.3435 region, which marked the highest level since March 2022 just last month.
