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GBP/USD Edges Higher as US Rate Cut Fears Increase

Last week’s high: $1.2561

Last week’s low: $1.2442

USD Dollar Sinks as the Fed Hints at Imminent Rate Cuts

The Pound US Dollar (GBP/USD) exchange rate rose last week following the Federal Reserve’s hints at a possible rate cut this month.

This came following comments from Fed Chairman Jerome Powell who said that global trade tensions and the strength of the global economy had weighed on the US economic outlook.

He also told the Financial Services Committee that a rate cut would come in the next meeting off officials later this month.

Meanwhile, Sterling benefited from Thursday’s Bank of England financial stability report, which said that the UK financial sector was ‘prepared’ for Brexit.

The GBP/USD exchange rate closed the week slightly higher, with US markets generally unmoved by the publication of the US PPI figures for June, which exceeded forecasts at 2.3%.

USD Outlook: Dovish Fed Commentary to Boost GBP/USD Further?

Looking to the week ahead, we could see the Pound hold onto its gains if the UK average earnings figures for May confirms that wage growth has risen.

Any further dovish commentary from Jerome Powell on Tuesday could also weigh further on USD.

Key Events

16th Jul

09:30 UK Average Earnings Excluding Bonus (May)

13:30 US Retail Sales Control Group (Jun)

18:00 Fed’s Chair Powell Speech

17th Jul

09:30 UK Retail Price Index (Jun)

09:30 UK Consumer Price Index (Jun)

13:30 US Housing Starts (Jun)

18th Jul

09:30 UK Retail Sales (Jun)

13:30 US Initial Jobless Claims (Jul)

19th Jul

15:00 US Michigan Consumer Sentiment Index (Jul)

Alastair Archbold
Foreign Exchange Manager

aja@fcgworld.co.uk

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