Pound maintains its rise ahead of US manufacturing and GDP reports.
On Wednesday, the Pound Sterling (GBP) extended its surge into a sixth day. As investors turned their attention to August industrial statistics in the United Kingdom. Which will be released on Thursday. The GBPUSD pair is benefiting from hawkish advice from Bank of England (BoE) policymaker Katherine Mann. As well as positive market sentiment. The Pound Sterling has done better versus the US Dollar because market investors do not expect the policy gap between the BoE. And the Fed to expand further. the Federal Reserve System (Fed).
Higher interest rates have wreaked havoc on UK economic activity. Factory output is likely to fall further in August as a result of the negative demand environment in both the local and international markets. Furthermore, in order to improve operational efficiency, UK enterprises have drastically reduced their inventory backlog as well as manpower. Due to rising borrowing costs, they look hesitant to build capacity.
Market Movers: Pound gains strength ahead of US data
The pound sterling maintains its winning streak. As market sentiment stays positive amid Middle East tensions.
The GBPUSD pair has seen five consecutive positive closings. As investors anticipate policy divergence between the Fed and the BoE. Not to spread any more.
In September, the Bank of England unexpectedly declared a pause in rate hikes in order to avert additional disaster in the UK’s economic operations.
The UK’s industrial activity, Services PMI, and construction activity all stayed below the 50.0 mark. In September, highlighting the implications of the Bank of England’s struggle against inflation.
The Pound Sterling’s rebound is not supported by favorable fundamentals. As a result. It may experience selling pressure as Bank of England policymaker Katherine Mann advocates. An aggressive strategy to bringing inflation down to 2% in a timely way.
The Bank of England’s Financial Policy Committee (FPC) cautioned on Tuesday. That rising borrowing costs may continue to put pressure on consumers.
Mann of the Bank of England stated that, in addition to decreasing inflation to 2%. The central bank must eliminate debt. Consumer inflation expectations are also growing.
Inflation in the United Kingdom might rise as a result of increased oil costs caused by the Israel Palestine conflict. Which would exacerbate worldwide consumer inflation. The IMF cautioned that a 10% increase in oil prices would reduce global production by 0.2% the next year while increasing global inflation by 0.4%.
Market players will be looking forward to the UK manufacturing activity statistics for August. Which will be released on Thursday at 06:00 GMT.
Investors expect monthly Manufacturing Production to fall by 0.3%.
Investors expect monthly Manufacturing Production to fall by 0.3%fall. At a softer 0.2% rate in August. After falling by 0.7% in July.
The yearly Manufacturing and Industrial production figures are predicted to rise by 3.4% and 1.7%, respectively. . The monthly Gross Domestic Product (GDP) is expected to grow by 0.2%. Following a 0.5% fall in July.
Because of the US Dollar’s decline, the GBPUSD pair has performed well. Because of increasing Treasury rates. The US Dollar Index (DXY) has steadied below 106.00. As Fed officials continue to favor an unchanged interest rate policy in November.
The USD Index is predicted to continue volatile. When the Federal Open Market Committee (FOMC) minutes. And producer inflation data are released.
The FOMC minutes will offer a full explanation for the unchanged interest rate decision made in September. Aside from that. The forecast for inflation and interest rates will be closely monitored.
Furthermore investors will be watching the September CPI this week. Which will influence the monetary policy decision at the November meeting.
