- GBP/USD holds positive ground around 1.2625 on Wednesday.
- Investors trim their bets on rate cut expectations from the Federal Reserve (Fed) from May to June meeting.
- The BoE Governor's optimistic outlook on the UK economy and policy shifts lifts the British Pound (GBP).
The GBP/USD pair edges higher above the 1.2600 mark during the early Asian session on Wednesday. The optimistic comments from Bank of England (BoE) Governor Andrew Bailey boosted the Pound Sterling (GBP). The major pair currently trades near 1.2625, unchanged for the day.
Investors lower their bets on the interest rate cuts from the Federal Reserve (Fed) since the US January Producer Price Index (PPI) data last week indicated elevated inflationary pressure in the US economy. The markets expect the first rate cuts from the Fed from the May to June monetary policy meeting. The Federal Reserve Open Market Committee's (FOMC) minutes for January’s policy meeting could provide some insight into the trajectory of interest rates.
On Tuesday, Bank of England (BoE) Governor Andrew Bailey testified on inflation and the economic outlook. Bailey said he was fine with investors betting on interest rate cuts this year, but he pointed to indicators that the British economy was recovering after going into a recession in late 2023. He also noted that inflation does not need to go below 2% before rate cuts occur and that it is not unrealistic to anticipate a rate decrease this year, but he did not provide a precise timeframe.
Looking ahead, the FOMC Minutes will be in the spotlight on Wednesday, and it might give more insight into why Fed policymakers are not confident enough to begin easing policy in Q1 2024. On Thursday, the preliminary US S&P Global PMI for February will be released. These events might provide a clear direction for the GBP/USD pair.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Outlook is still bearish below 0.6630
AUD/USD extended its gains from Wednesday, supported by continued selling pressure on the US Dollar. However, weak performance in the commodities market and disappointing Chinese PMI data limited the Australian dollar's upward potential.
EUR/USD set sails to the 1.0900 region and beyond
EUR/USD maintained its weekly march north well in place for yet another day on Thursday, this time coming closer to the key 1.0900 barrier in response to extra weakness in the Greenback ahead of key US NFP data due on Friday.
Gold retreated sharply, trades around $2,740
Prices of Gold trade markedly on the defensive on Thursday following a marginal uptick in the Greenback and declining US yields. Despite the daily pullback, the yellow metal is anticipated to remain bolstered by steady uncertainty pre-US election.
Ethereum: ETH could bounce off $2,490 as it has recovered most of its TVL outflows
Ethereum (ETH) is down over 5% on Tuesday but could bounce off the $2,490 key support level as most of the total value locked (TVL) that left its Layer 1 chain has remained within the broader ETH ecosystem.
Bank of Japan holds rates steady amid signs of modest GDP growth
Monthly industrial production results have been mixed but generally indicate a modest recovery in third-quarter GDP. Clear guidance from the Bank of Japan remains elusive, with each upcoming meeting being pivotal.
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.