We have seen the British Pound make a remarkable rebound from its record lows in late September 2022, following the controversial tax-cuts plans that were instituted by former Prime Minister Liz Truss. The Pound (GBP) has appreciated vs. USD from below $1.0400 to approximately $1.2680 during that time frame.
There are many predicting that the Sterling run is getting closer to reaching its peak. With the Bank of England maintaining a hawkish approach to persistent inflation throughout the balance of 2023, this Tuesday’s Purchasing Manager’s survey suggested that UK has increased at a slower pace in May, and manufacturing output decreased more sharply. This could be early signs that higher interest rates could be taking its toll on both households and businesses, as banks are also slowing down on the lending side.
CPI data released on Wednesday showed that UK headline CPI inflation rate fell by less than expected in April to 8.7% from 10.1% in the previous month. The core inflation numbers (excluding food and energy) rose to 6.8%. The persistent consumer inflation pressures are pointing to a prolonged tightening policy by the Bank of England. The markets are beginning to price in 2-3 more 25 bps rate increases over the next 3 meetings. Similar to what is shaping up in the US, the UK is adamant to get inflation under control, which will result in an economic slowdown of the UK economy in the second half of 2023.
Having access to quality market data from TraditionData during this period of heightened Central Bank monetary policy decision making, is critical for financial institutions to ensure they are making the appropriate FX trading and hedging decisions.
The information contained herein is the property of Compagnie Financière Tradition S.A. or any of its subsidiaries (together “Tradition”). Any review, disclosure, dissemination, distribution or copying of the information, whether in full or in part, is strictly prohibited and only intended for confidential use by the designated recipient(s). All content is provided “as is”, without warranty of any kind, either express or implied, including without limitation, warranties of merchantability, fitness for a particular purpose, and non-infringement. Nothing herein constitutes investment advice or an offer, or solicitation of an offer to buy or sell any financial product. Any data consists of purely indicative prices and should not be relied upon to revalue any commercial positions held by any recipient. To the maximum extent of the law, Tradition specifically does not make any warranties or representations as to the appropriateness, quality, timeliness, accuracy or completeness of the information and shall not be liable for any inaccuracy, error, omission, interruption, timeliness, incompleteness, deletion, defect, failure of performance, alteration or use of any of the content displayed, regardless of cause, or for any damages resulting therefrom. Tradition services are not available to private or retail clients. This information is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to any applicable law or regulation. Copyright © Compagnie Financière Tradition S.A., 2023. Commercial in Confidence.
Recommended Content
Editors’ Picks
EUR/USD extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.