Pound Sterling is struggling to make a decisive move ahead of the Fed and BoE’s monetary policy decisions.
The Pound Sterling (GBP) fell on Wednesday as investors awaited monetary policy decisions. From the US Federal Reserve (Fed) and the Bank of England (BoE). The GBPUSD pair is still on edge as investors expect the Bank of England to leave interest rates unchanged.
As concerns about a slowing economy grow, the Bank of England is anticipated to hold interest rates unchanged.
The Pound Sterling’s near-term demand appears shaky. As investors appear to expect that the Bank of England would raise interest rates. Will keep rates constant. Despite persistent price pressures. As a result of concerns about the UK economy slowing. Aside from the monetary policy decision. Investors will be looking for clues on future interest rates and the inflation outlook. UK Prime Minister Rishi Sunak pledged in January to cut inflation by half to 5.4%. By the end of the year, a goal that appears tough given that annual price increase was 6.7% in September, virtually unchanged from July.
Daily Market Movers : The Pound Sterling juggles ahead of important monetary policy decisions
Pound Sterling continues under pressure as the appeal of risky assets fades. Ahead of the Federal Reserve’s monetary policy meeting and ongoing Middle East tensions.
Hamas has declared that it will release hostages in the coming weeks. days, but no truce is expected because the Israeli Defense Forces (IDF) intend to enter Gaza for a full-fledged ground offensive.
Aside from geopolitical issues, market investors’ caution ahead of the Bank of England meeting is keeping the Pound Sterling on edge.
On Thursday, the Bank of England is anticipated to hold interest rates unchanged at 5.25%. After 14 consecutive rate hikes, policymakers will leave interest rates unchanged for the second meeting in a row.
Stubborn UK inflation jeopardizes Prime Minister Rishi Sunak’s pledge to reduce inflation to 5.4% by the end of the year.
Investors are skeptical that UK Prime Minister Rishi Sunak would keep his vow to reduce inflation to 5.4% by the end of the year.
Consumer inflation in the UK is the highest among G7 economies, owing to strong wage increases. Despite persisting inflationary risks, the BoE is poised to keep the status quo. As a result of deteriorating labor demand, the economy is slowing.
The UK Office for National Statistics (ONS) stated that employment fell for the third consecutive month in August, raising concerns about the Unemployment Rate.
Other economic data indicating sluggish consumer spending and declining business investment reinforce the BoE’s decision to keep interest rates constant.
While strong wage growth continues to put pressure on prices, food price inflation fell considerably in October. In a volatile economy, high inflation and soft labor demand encouraged people to spend less and conserve more.
Furthermore the British Retail Consortium (BRC) stated on Tuesday that food inflation has fallen for the sixth month in a row. The food price index fell to 8.8% in October from 9.9% in September. .
Meanwhile, the US Dollar Index (DXY) is trading flat near 106.80 following a dramatic recovery as investors anticipate the Fed’s monetary policy decision, private payroll data, and the October ISM Manufacturing PMI.
Fed is projected to retain interest rates in the 5.25%.
The Fed is projected to retain interest rates in the 5.25%-5.50% range. But will provide hawkish guidance because inflation in excess of 2% appears to be the most intractable due to healthy consumer spending, good labor market conditions, and expectations of a recovery in business activity.
A positive report on private payrolls and manufacturing activity would support. The US dollar since it would allow the Fed to keep interest rates high for a longer period of time.
Moreover According to S&P Global October survey of private factories. The Manufacturing PMI came in at the top. The 50.0 threshold distinguishes between expansion and decrease in factory activity.
