Daily digest market movers: Pound Sterling outperforms major peers
- The Pound Sterling strengthens against the US Dollar (USD) in Thursday’s European trading hours. The GBP/USD pair capitalizes on US Dollar’s subdued performance as Federal Reserve (Fed) interest-rate cuts in September takes the center stage after the United States (US) CPI report for July showed that price pressures are on track to return to the desired rate of 2%.
- The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, pulls back slightly after posting a fresh weekly low at 102.20. The CPI report on Wednesday showed that inflationary pressures grew moderately, as expected. This has boosted confidence that the Fed will deliver a dovish decision and go for its first interest-rate cut in more than four years. However, traders remain split over the size at which borrowing rates will be reduced.
- The confidence over the Fed reducing interest rates in September was further boosted by dovish interest rate guidance from Atlanta Fed Bank President Raphael Bostic after the release of the inflation data. Bostic told in an interview to the Financial Times (FT) that he is comfortable with rate cuts in September. When asked about the rate-cut size, Bostic said that he is open for half-a-point if the labor market deteriorates further.
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