The British pound, paired with the US dollar, maintains positive momentum. The current GBPUSD exchange rate stands at 1.2657.
Meanwhile, it is worth noting that GBP gains appear relatively modest as the market still experiences pressure from the trajectory of the US dollar. The chances of an interest rate cut from the Federal Reserve have significantly decreased compared to the levels seen earlier in the year. Initially, investors expected six rate cuts but now only anticipate a maximum of three.
The latest comments from the US Federal Reserve chair, Jerome Powell, indicating that the Fed is in no hurry to make essential decisions, were supported by data on prices and employment. The US economy is clearly in a more stable position than it appeared at the beginning of the year, which is positive news for the US and the US dollar but not for interest rate prospects.
The market has already factored in the Bank of England’s soft stance on interest rates and the declining inflation parameters in the UK. Core inflation in the UK is currently holding steady at 4.5%, significantly higher than the 2% inflation target, ruling out a scenario of rapid interest rate cuts.