• Wed. May 22nd, 2024

GBP/USD Falls Because the BoE Sends Mixed Messages and US Bond Yields Rise

Leon Kramer

ByLeon Kramer

Nov 12, 2023

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  • The GBP/USD currency pair persists in its ongoing descent, experiencing a decline of 0.25%, notwithstanding the presence of contradictory statements by the Chief Economist and Governor of the Bank of England.
  • The latest data on US jobless claims has surpassed expectations, indicating a noteworthy performance by the labor market and contributing to the ongoing discussion among Federal Reserve policymakers.
  • The British Pound is preparing itself for the release of the UK’s Q3 GDP report, as investors eagerly anticipate valuable insights that may arise from Fed Chair Powell’s participation in the IMF panel discussion.

The British Pound (GBP) experienced a continuation of its decline against the US Dollar (USD), with a consecutive four-day decrease of 0.25% after reaching a daily peak of 1.2308. However, the Pound experienced a decline due to the Bank of England’s Chief Economist Huw Pill’s dovish comments on Tuesday, which sparked speculations of a potential rate cut. The exchange rate between the British Pound (GBP) and the United States Dollar (USD) currently stands at 1.2249.

The GBP/USD Falls to 1.2249 as BoE Officials Send Mixed Messages and the US Job Claims Report Comes in Strong

On Wednesday, the remarks made by BoE Governor Andrew Bailey served to temper the sentiment expressed by Pill, who suggested that the market’s anticipation of a rate reduction in August 2024 appeared to be a reasonable assessment. However, Bailey said it is premature to consider implementing rate cuts at this stage.

During the earlier European session, Huw Pill made a notable statement wherein he revised his comments from Monday and emphasized the necessity of maintaining a tight monetary policy to mitigate inflationary pressures.

In addition, it is noteworthy that unemployment claims in the United States (US) were decelerated compared to the preceding week’s Initial Jobless Claims report. The report indicated a rise of 220K. In contrast, the current account reflects a figure of 217K, thus falling below the projected estimate of 218 K.

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Despite indications of a constrained labor market, the recent Nonfarm Payrolls report released on Friday revealed a modest increase of 150,000 jobs in the economy, falling short of the projected 180,000 jobs. Additionally, the report highlighted a notable rise in the unemployment rate, reaching 3.9%.

As a result, a discernible schism has emerged among the policymakers of the Federal Reserve, wherein a majority of members have espoused a more impartial position. However, it is essential to note that the forthcoming inflation report has the potential to alter the prevailing perspectives held by the members of the Federal Open Market Committee (FOMC).

In a recent development, it has been observed that a US 30-year bond auction has resulted in a notable yield of 4.769%. This occurrence has subsequently led to a significant surge in US Treasury bond yields. The Greenback is currently exhibiting an impressive upward trajectory, as evidenced by the US Dollar Index (DXY) registering a gain of 0.19%, reaching a value of 105.72.

The forthcoming agenda in the United Kingdom includes the Gross Domestic Product (GDP) for the third quarter, with an anticipated contraction of 0.1% quarter-on-quarter. Regarding the United States, it is noteworthy that Federal Reserve Chair Jerome Powell will participate in a discussion panel organized by the International Monetary Fund (IMF).

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Leon Kramer

Leon Kramer

Leon Kramer, a renowned financial author, enlightens Main Forex News readers with his deep understanding of currency markets. His years in global finance, combined with an intuitive grasp of trends, delivers insightful, up-to-the-minute foreign exchange analysis.

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