Gbpusd At Multi Month High

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Gbpusd At Multi Month High

GBP/USD At Multi-Month High After Hawkish BoE Officials

The GBP/USD has maintained its bullish bias and is trading near the 1.2535 level. If we look back, that's the 4th day in a row that the Pound/Dollar has managed to stay green.

All of this positivity is stemming from the hawkish comments from the Bank of England Officials. When combined with the recent USD action, it makes sense for the GBP/USD to turn higher.

UK's Inflation Remains Persistent

Recently, the governor of the BoE made it clear that investors shouldn't be paying too much attention to the recent economic data. At the same time, he also highlighted that the inflation in the UK is still very persistent. Given the economic condition, the governor stressed the need not to go with rate cuts and how higher interest rates are needed to solve the inflation problem.

After these comments, the rumors that the BoE will move into policy easing starting from the middle of 2024 have died. On the US side, there was no talk of rate cuts in 2024, but the markets are still hopeful that it will happen sometime in next year.

In a sense, we can say that the comments from FOMC were hawkish, but the effect didn't transfer to the USD strength. If we take a closer look at the meeting minutes, it becomes clear that the Fed officials also talked about the need for higher interest rates for a really long time.

But it looks like the markets focused more on the fact that the Fed will not raise rates and will keep them steady. Since the market was already expecting that, they received no surprise from the Fed's side, which led to USD weakness.

Looking ahead, the market players believe that there is a good chance of a rate cut at the Fed's meeting on 30th April 2024. This rumor is keeping the bond yields lower, which in turn is keeping the greenback under pressure as well.

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