Daily digest market movers: Pound Sterling declines moderately against US Dollar
- The Pound Sterling edges lower near the psychological support of 1.3000 against the US Dollar (USD) in Thursday’s European session. The broader appeal of the GBP/USD pair remains firm as the Federal Reserve (Fed) is widely expected to start lowering its key borrowing rates from the September meeting.
- The scenario of higher expectations for Fed rate cuts is unfavorable for the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, hovers near an almost four-month low at around 103.70.
- Firm speculation for Fed rate cuts has been prompted by meaningful signs from June’s Consumer Price Index (CPI) report that the disinflation process has resumed after stalling in the first quarter of the year. Annual headline and core CPI, which excludes volatile food and energy prices, decelerated at a faster-than-expected pace.
- Cooling inflationary pressures have also improved Fed officials’ confidence that price pressures are on track to return to the central bank’s target of 2%. On Wednesday, Richmond Fed Bank President Thomas Barkin cited broadening disinflation as “very encouraged.” Barkin added he is sure policymakers will debate at the July policy meeting whether it is still appropriate to describe inflation as elevated, Reuters reported.
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