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27 May 2024

GBP/USD rises to near 1.2750 despite diminishing expectations for Fed rate cuts

  • GBP/USD extends gains due to risk-on sentiment after UoM's 5-year Consumer Inflation Expectations.
  • CME FedWatch Tool suggests the likelihood of the Fed’s rate cut in September has decreased to 44.9% from 49.0% a week earlier.
  • UK's softer inflation has tempered expectations of BoE’s rate cut in June.

GBP/USD advances for the second successive session, trading around 1.2740, near two-month highs, during the Asian hours on Monday. The appreciation in the GBP/USD could be attributed to the risk-on sentiment, despite diminishing expectations for Federal Reserve interest rate cuts. It is worth noting that the UK market will be closed due to the Spring Bank Holiday and the US market will be closed due to the Memorial Day bank holiday on Monday.

The University of Michigan's 5-year Consumer Inflation Expectations for May on Friday. It eased slightly to 3.0%, below the forecasted 3.1%. Despite the upward revision of the Consumer Sentiment Index to 69.1 from a preliminary reading of 67.4, it still marked the lowest level in six months. These figures likely contributed to strengthening investors’ sentiment regarding potential rate cuts by the Federal Reserve. This has weakened the Greenback and underpinned the GBP/USD pair.

According to the CME FedWatch Tool, the probability of the Federal Reserve implementing a 25 basis-point rate cut in September has decreased to 44.9% from 49.0% a week earlier.

In the United Kingdom (UK), traders have digested lower-than-anticipated Retail Sales data released on Friday. April saw a notable 2.3% decline in the monthly volume of sales of goods by retailers, far worse than the expected 0.4% downturn. On an annual basis, sales dipped by 2.7%, compared to the expected 0.2% decrease. Meanwhile, GfK Consumer Confidence softened to a reading of -17 in May, slightly better than the anticipated -18 reading and the previous -19.

Furthermore, the UK's annual inflation rate has moderated, edging closer to the Bank of England's (BoE) target of 2%. This moderation has tempered expectations of a rate cut in June among investors, potentially bolstering support for the Pound Sterling (GBP).

GBP/USD

Overview
Today last price 1.2742
Today Daily Change 0.0004
Today Daily Change % 0.03
Today daily open 1.2738
 
Trends
Daily SMA20 1.2603
Daily SMA50 1.2581
Daily SMA100 1.2633
Daily SMA200 1.2541
 
Levels
Previous Daily High 1.2751
Previous Daily Low 1.2676
Previous Weekly High 1.2761
Previous Weekly Low 1.2676
Previous Monthly High 1.2709
Previous Monthly Low 1.23
Daily Fibonacci 38.2% 1.2722
Daily Fibonacci 61.8% 1.2705
Daily Pivot Point S1 1.2692
Daily Pivot Point S2 1.2646
Daily Pivot Point S3 1.2617
Daily Pivot Point R1 1.2767
Daily Pivot Point R2 1.2797
Daily Pivot Point R3 1.2842

 

 

May 27, 2024

ECB’s Lane: There is enough in what we see to start interest rate cuts

In an interview with the Financial Times on Monday, European Central Bank (ECB) Chief Economist Phillip Lane said that “there is enough in what we see to start interest rate cuts.” Additional quotes I think we have been successful in getting inflation down in a timely manner.
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Japan Leading Economic Index came in at 112.2, above forecasts (111.4) in March

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