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Market Analysis

US dollar/GBP remains over 1.3150 ahead of the UK CPI and the Fed's interest rate announcement
Amos Simanungkalit · 29.2K Views

13
GBP/USD edges higher toward 1.3160 during Wednesday's Asian session as traders anticipate the release of the UK's August Consumer Price Index (CPI) data. Attention will soon shift to the Federal Reserve's (Fed) interest rate decision later in the North American session.

The UK's CPI is expected to show an annual increase of 2.2% for August, in line with July's figures. The core CPI is projected to rise to 3.5% annually, up from the previous 3.3%. Additionally, monthly inflation is forecast to grow by 0.3%, following a 0.2% drop in July.

The Bank of England (BoE) will announce its monetary policy decision on Thursday, with inflation trends likely playing a key role. Financial markets expect the BoE to keep interest rates steady at 5%, with a more aggressive stance anticipated from November. The BoE predicts inflation could peak at 2.75% in the coming months before declining, potentially falling below the 2.0% target by 2025.

Meanwhile, the US Dollar faces pressure amid growing expectations that the Federal Open Market Committee (FOMC) may announce a significant 50 basis point rate cut on Wednesday. According to the CME FedWatch Tool, markets now see a 33.0% chance of a 25-basis-point cut, while the likelihood of a 50-basis-point reduction has risen to 67.0%, up from 62.0% just a day earlier.

On Tuesday, US Retail Sales increased by 0.1% month-over-month in August, surpassing the expected 0.2% decline. This followed a revised 1.1% increase in July, signaling continued strength in consumer spending. Additionally, the Retail Sales Control Group rose by 0.3%, slightly below the 0.4% rise seen in the previous month.

 

 

 

 

 

Paraphrasing text from "FX Street" all rights reserved by the original author.

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