Pound Sterling surges to 1.2600 on Uncertainties regarding BoE rate cuts and a weak US dollar.
In Wednesday’s London session, the Pound Sterling (GBP) reached a new weekly high versus the US Dollar (USD) at round level resistance of 1.2600. The GBPUSD pair remains strong as the US Dollar falls. Ahead of the April Consumer Price Index (CPI) data. Moreover Which will be released at 12:30 GMT. The US Dollar Index (DXY), which tracks the value of the Greenback against six Major Currencies fall below the critical support level of 105.00.
The UK’s steady wage rise raises concerns about long-term Inflationary pressures.
Economists Anticipate that monthly Headline Inflation will rise at a steady 0.4%. The core CPI, which Excludes volatile food and energy costs, is forecast to increase by 0.3% in April, down from 0.4% in March. The annual headline CPI is expected to have eased to 3.4% from 3.5% in March. Core inflation is expected to fall to 3.6% from 3.8% in the previous quarter.
Moreover Inflation data will have a big impact on speculation about interest rate decreases by the Federal Reserve (Fed). Currently, financial markets expect the Fed to begin decreasing interest rates at its September meeting.
Investors will focus Conditions have deteriorated for the third time in a row.
Along with the inflation reading, investors will focus Conditions have deteriorated for the third time in a row. Furthermore The unemployment rate increased to 4.3%, as projected. Due to escalating joblessness. Historically, easing labor market circumstances have raised expectations. That the central bank will lower interest rates. However, the impact of the loosening labor market was mitigated by consistent wage rise.
Furthermore High service inflation remains a source of concern for BoE policymakers. As it threatens to impede progress in the disinflationary process. Furthermore Wage growth appears to be much stronger than what is required to bring inflation back to the goal rate of 2%.
Moreover Following the labor market data, BoE Chief Economist Huw Pill commented: “Rates of pay growth continue pretty far beyond what would be consistent for fulfilling the “Sustainable inflation target of 2%.” Pill highlighted the importance of maintaining a restrictive monetary policy stance, which continues to put downward pressure on domestic inflation. Regarding rate reduction, Pill stated that it is realistic to think that by the summer, “we will see enough confidence to consider lowering interest rates.”
