(MENAFN- Daily Forex)
The recent failure of the pound to hold its ground has seen the GBP/USD currency pair break below the 1.2600 support level. Losses are extending to 1.2571 at the start of this important trading week before stabilizing around 1.2636 at the time of writing the analysis. According to forex trading platforms, the US dollar has risen after a key member of the US Federal Reserve said that recent US inflation data was disappointing, dampening market expectations for imminent interest rate cuts.
Selling of the
GBP/USD
increased after Federal Reserve Board member Christopher Waller stated that there is "no rush" to lower interest rates due to recent disappointing inflation data. Furthermore, the analysts believe that the speech confirmed the market's view that the Federal Reserve will be late to the rate-cutting party.
Waller, speaking at an Economic Club gathering in New York, said, "There is no rush to cut interest rates" at the moment. Recent data "tells me that it is wise to keep this rate at its current accommodative stance perhaps for longer than previously thought to help keep inflation on a sustainable path towards 2%." He added, "It is appropriate to dial back the total number of interest rate cuts or push them further into the future in response to recent data."
At the end of last week's trading, Federal Reserve Bank of San Francisco President Powell said that the inflation data on personal consumption expenditures for February were more in line with what the Federal Reserve wanted to see, and it's good to see something that matches expectations. Conversely, the recent readings are not as good as policymakers saw last year, and the
Federal Reserve
can wait and become more confident before cutting interest rates.
Forex Brokers We Recommend in Your Region See full brokers list 1 Read full review Get Started
In fact, policymakers do not need to rush to cut borrowing costs. Powell added that the Fed's fundamental case is for inflation to fall. Ultimately, if that doesn't happen, the Federal Reserve will keep interest rates as they are for longer.
Overall, the US dollar is the best-performing currency for 2024 due to significantly reduced expectations of interest rate cuts this year thanks to continued US economic strength. Also, Waller stated that he expects inflation to eventually decrease, and it would be appropriate for the Federal Reserve to "begin narrowing the target range for the federal funds rate this year."
He added that it may take a few months of easing inflation data to gain that confidence, but until then, a strong economy gives the Fed room to evaluate the economy's performance. Although markets have lowered their expectations for a June US interest rate hike at the Federal Reserve, Steve Englander, economist at Standard Chartered Bank, says June is still in the cards, and the first cut could take place in May Expectations and Analysis Today:
According to the performance on the daily chart attached, the price of the British pound against the US dollar GBP/USD is on its downward path. Breaching the support at 1.2600 motivates the bears to move further downward. Currently, the next most important support levels will be 1.2545 and 1.2480, and from the last level, the technical indicators will move towards strong selling saturation levels. On the other hand, the resistance 1.2775 will remain the most important for the bulls to control the trend again. Today is a British holiday and from the United States the reading of the ISM Manufacturing Purchasing Managers' Index will be announced.
Ready to trade our daily Forex analysis ? We've made this UK forex brokers list for you to check out.
MENAFN01042024000131011023ID1108044985
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.