- The Pound Sterling remains under pressure around 1.3330 against the US Dollar ahead of the US PCE Price Index data for August.
- The US economy grew at a robust pace of 3.8% in the second quarter of the year.
- BoE monetary policymaker Megan Greene warns of upside inflation risks.
The Pound Sterling (GBP) trades with caution around 1.3330 against the US Dollar (USD) during the European trading session on Friday, around the seven-week low at 1.3324 posted on Thursday. The GBP/USD pair faces selling pressure as the US Dollar (USD) trades firmly ahead of the United States (US) Personal Consumption Expenditure Price Index (PCE) data for August, which will be published at 12:30 GMT.
At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades firmly near its fresh four-week high around 98.40 posted on Thursday.
Investors will closely monitor the US PCE inflation data to get cues about whether tariffs imposed by President Donald Trump are still prompting price pressures. Lately, a majority of Fed officials have advised caution on further interest rate cuts as risks to inflation have shifted to the upside.
The US core PCE inflation, which is the Fed’s preferred inflation gauge, is estimated to have grown at a moderate pace of 0.2% on a monthly basis against the prior reading of 0.3%, with yearly figures rising steadily by 2.9%.
Signs of price pressures cooling down would prompt market expectations for more interest rate cuts by the Fed in the remainder of the year. The central bank delivered its first cut in the monetary policy meeting last week, reducing rates by 25 basis points (bps) to 4.00%-4.25%. On the contrary, hot inflation figures would diminish Fed dovish expectations.
According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 50 bps by the year-end eased to 62% from 78.6% seen a week ago.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | -0.05% | -0.09% | 0.11% | 0.06% | 0.11% | -0.03% | |
| EUR | 0.04% | 0.04% | 0.02% | 0.20% | 0.18% | 0.23% | 0.03% | |
| GBP | 0.05% | -0.04% | 0.08% | 0.17% | 0.23% | 0.19% | -0.03% | |
| JPY | 0.09% | -0.02% | -0.08% | 0.16% | 0.11% | 0.18% | -0.10% | |
| CAD | -0.11% | -0.20% | -0.17% | -0.16% | -0.05% | 0.04% | -0.18% | |
| AUD | -0.06% | -0.18% | -0.23% | -0.11% | 0.05% | 0.04% | -0.13% | |
| NZD | -0.11% | -0.23% | -0.19% | -0.18% | -0.04% | -0.04% | -0.11% | |
| CHF | 0.03% | -0.03% | 0.03% | 0.10% | 0.18% | 0.13% | 0.11% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Daily digest market movers: Pound Sterling trades calmly against its peers
- The Pound Sterling trades higher against its major peers on Friday as investors expect the Bank of England (BoE) to hold interest rates steady at 4% in the remainder of the year. The BoE is unlikely to cut rates in the near term as inflationary pressures in the United Kingdom (UK) economy are proving to be persistent.
- On Wednesday, BoE Monetary Policy Committee (MPC) member Megan Greene, who voted to hold interest rates steady in the last two monetary policy meetings, warned of upside inflation risks and advised caution on loosening the monetary policy further. She added that the impact of the US tariffs-driven global trade war is fizzling out, and an economic recovery looks likely. “Trade risks have abated, and we [BoE] expect growth to ‘rebound’, which won’t lead labour market risks materializing,” Greene said.
- Contrary to Megan Greene’s caution on price pressures, the monetary policy statement of last week’s meeting showed that consumer inflation would peak around 4% in September.
- On the US Dollar front, the major currency rallied on Thursday after upbeat revised United States (US) Q2 Gross Domestic Product (GDP) and lower Initial Jobless Claims for the week ending September 20.
- Revised US Q2 GDP data showed that the economy grew at an annualized pace of 3.8%, faster than the preliminary estimate of 3.3%. Meanwhile, the number of individuals seeking jobless benefits for the first time came in lower at 218K. Economists expected Initial Jobless Claims to come at 235K, marginally higher than the prior reading of 232K.
- Meanwhile, US tariff fears have renewed again as Trump has increased import duties on pharmaceuticals, heavy-duty trucks, and furniture.
Technical Analysis: Pound Sterling breaks Rising Channel to the downside
The Pound Sterling struggles to gain ground near its seven-week low around 1.3330 against the US Dollar on Friday. The GBP/USD pair has weakened as it has delivered a breakdown of the Rising Channel formation, resulting in a bearish reversal.
The near-term trend of the Cable is bearish as it stays below the 20-day Exponential Moving Average (EMA), which trades around 1.3488.
The 14-day Relative Strength Index (RSI) breaks below 40.00 on the daily chart. A fresh bearish momentum would emerge if the RSI stays below that level.
Looking down, the August 1 low of 1.3140 will act as a key support zone. On the upside, the psychological figure of 1.3500 will act as a key barrier.
Economic Indicator
Core Personal Consumption Expenditures – Price Index (YoY)
The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures.” Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
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