Pound Sterling refreshes four-month low ahead of Powell-Bailey’s speeches


  • The Pound Sterling posts a fresh over four-month low near 1.2660 against the US Dollar on confirmation that Trump will control both US houses.
  • An expected acceleration in US inflation keeps the Fed on course to cut interest rates in December.
  • Investors await Fed Powell and BoE Bailey’s speeches in the North American session.

The Pound Sterling (GBP) refreshes over a four-month low below the round level of 1.2700 against the US Dollar (USD) in Thursday’s London session. The GBP/USD pair extends its downside for the fifth consecutive trading day as the US Dollar (USD) continues to gain on optimism over the United States (US) economic outlook, fuelled by headlines that President-elected Donald Trump and the Republican Party will control both the US Senate and the House of Representatives, according to the Associated Press.

This “clean sweep” will allow Donald Trump to execute his protectionist and expansionary policies without interruption. Trump vowed to raise import tariffs by 10% universally and lower taxes on corporations and workers in his election campaign.

Market participants believe that lower taxes and higher import tariffs will result in a high-inflation environment, a scenario that would limit the Federal Reserve’s (Fed) potential to cut interest rates aggressively. Markets currently highly anticipate a 25 basis points (bps) interest rate cut that will push borrowing rates lower to 4.25%-4.50% in December, according to the CME FedWatch tool. Market expectations for the Fed to cut interest rates again next month strengthened after the October Consumer Price Index (CPI) data released on Wednesday showed that inflationary pressures rose in line with estimates.

In Thursday’s US economic calendar, investors will focus on Fed Chair Jerome Powell’s speech, Initial Jobless Claims data for the week ending November 8, and the Producer Price Index (PPI) data for October for fresh guidance on interest rates.

Daily digest market movers: Pound Sterling trades cautiously ahead of BoE Bailey’s speech

  • The Pound Sterling exhibits a mixed performance against its major peers and is notably weak against the US Dollar on Thursday ahead of Bank of England (BoE) Governor Andrew Bailey’s speech at 21:00 GMT. Bailey is expected to provide cues about whether the BoE will cut interest rates again in December and the potential consequences of Trump’s policies on the United Kingdom (UK) economy.
  • In his last interaction with the media in the press conference after the decision to reduce interest rates by 25 bps to 4.75% last week, Bailey said that the policy-easing cycle would be more gradual as Labour’s first budget could increase inflationary pressures and economic growth.
  • Investors will also pay close attention to the outlook of inflation in the services sector, a closely tracked indicator by BoE officials for decision-making on interest rates. The Service inflation is expected to remain sticky as the Average Earnings data rose more than expected in the three months ending September. 
  • Meanwhile, BoE external policy member Catherine Mann said in a panel discussion organized by BNP Paribas on Wednesday that the progress in the disinflation process could slow down as energy prices are more likely to rise than fall and highlighted inflation in the service sector as "pretty sticky," Bloomberg reported. Investors should note that Mann is an outspoken hawk who voted to leave interest rates unchanged at 5% in last week’s monetary policy meeting.

Technical Analysis: Pound Sterling establishes below 200-day EMA

The Pound Sterling extends its losing streak against the US Dollar for the fifth trading day on Thursday and declines to near the August low of 1.2665 after establishing below the 200-day Exponential Moving Average (EMA), which trades around 1.2855.

A bearish momentum has kicked in with the 14-day Relative Strength Index (RSI) sustaining below 40.00.

Looking down, the round-level support of 1.2600 will be a major cushion for Pound Sterling bulls. On the upside, the Cable will face resistance near the 200-day EMA

Economic Indicator

BoE's Governor Bailey speech

Andrew Bailey is the Bank of England's Governor. He took office on March 16th, 2020, at the end of Mark Carney's term. Bailey was serving as the Chief Executive of the Financial Conduct Authority before being designated. This British central banker was also the Deputy Governor of the Bank of England from April 2013 to July 2016 and the Chief Cashier of the Bank of England from January 2004 until April 2011.

Read more.

Next release: Thu Nov 14, 2024 21:00

Frequency: Irregular

Consensus: -

Previous: -

Source: Bank of England

 

Share: Feed news

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


Recommended content

Editors’ Picks

EUR/USD stays pressured toward 1.0500, US PPI data next in focus

EUR/USD stays pressured toward 1.0500, US PPI data next in focus

EUR/USD remains heavy toward 1.0500 in the European session on Thursday, hanging at yearly lows. The Trump trades-driven unabated US Dollar demand and tarrifs threat weigh on the pair. Mixed Eurozone data fail to lift the Euro. Eyes turn to US PPI data and Fed Chair Powell. 

EUR/USD News
GBP/USD holds losses near 1.2650 on relentless US Dollar buying

GBP/USD holds losses near 1.2650 on relentless US Dollar buying

GBP/USD is holding losses while flirting with multi-month lows near 1.2650 in European trading on Thursday. The pair remains vulnerable amid a broadly firmer US Dollar and softer risk tone even as BoE policymakers stick to a cautious stance on policy. Speeches from Powell and Bailey are eyed. 

GBP/USD News
Gold price approaches 100-day SMA/50% Fibo. confluence amid sustained USD buying

Gold price approaches 100-day SMA/50% Fibo. confluence amid sustained USD buying

Gold price touches its lowest level since September 19, around $2,550 area during the early part of the European session on Thursday. The US Dollar buying remains unabated in the wake of optimism over the expected expansionary policies by US President-elect Donald Trump.

Gold News
XRP struggles near $0.7440, could still sustain rally after Robinhood listing

XRP struggles near $0.7440, could still sustain rally after Robinhood listing

Ripple's XRP is trading near $0.6900, down nearly 3% on Wednesday, as declining open interest could extend its price correction. However, other on-chain metrics point to a long-term bullish setup.

Read more
Trump vs CPI

Trump vs CPI

US CPI for October was exactly in line with expectations. The headline rate of CPI rose to 2.6% YoY from 2.4% YoY in September. The core rate remained steady at 3.3%. The detail of the report shows that the shelter index rose by 0.4% on the month, which accounted for 50% of the increase in all items on a monthly basis. 

Read more
Best Forex Brokers with Low Spreads

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.

Read More

Forex MAJORS

Cryptocurrencies

Signatures