GBP/USD faced some fresh downside pressures into the close of the week, trading around the 1.3470 area. Purchasing demand for the Greenback has begun to make a comeback, if only somewhat. This move has been sending the currency pair and is indicative of a razor-edge, turbulent market environment.
The story for GBP/USD has changed dramatically in the wake of better-than-expected economic data and according to GBP/USD dynamics. The July payrolls numbers created major whipsaw one month ago, controversial at the time for disagreeing with President Trump’s economic boom argument. These payrolls figures have understandably left investors on edge as they try to determine what these figures mean for future monetary policy.
Moreover, US inflation, as measured by the Personal Consumption Expenditures (PCE) index, came in-line with consensus expectations for July. This information lays the groundwork for future potential rate increases. Fingers crossed that the Federal Reserve will take such an action at its next meeting on September 17. Some analysts argue that expectations for a forthcoming rate cut are driving GBP/USD’s trading range and trends. Investors are eagerly looking to see how the declines in interest rates will affect currency valuations.
After suffering through the early pangs of defeat, GBP/USD has turned the tide and rallied from two-day lows. Traders are increasingly eyeing the 1.3500 level in the currency pair. They continue to be guardedly optimistic as the market surprises in every direction. The latest PCE data remains the main focus of analysis by investors, influencing their strategy in the days ahead.
Even as gold prices trend towards four-month highs above $2,000, GBP/USD appears intent on carving its own path. The dynamic relationship between US interest rates and currency strength still rules the market’s trading pattern in the forex market.