- GBP/USD strengthens near 1.3460 in Thursday’s Asian session.
- Traders brace for Fedspeak and US Q2 GDP growth data later on Thursday for fresh impetus.
- Fiscal concerns and signs of slowdown in UK business activity could underline the Pound Sterling.
The GBP/USD pair recovers some lost ground to around 1.3460 during the Asian trading hours on Thursday. The US Dollar (USD) weakens against the Pound Sterling (GBP) as traders await more cues from the Fedspeak later on Tuesday. Also, the final print of the US Gross Domestic Product (GDP) growth for the second quarter (Q2), Durable Goods Orders and weekly Initial Jobless Claims will be published.
Traders weighed the prospect of a Federal Reserve (Fed) easing cycle in the wake of a cautious tone from policymakers while awaiting data that may outline the impact of tariffs. Fed’s Powell struck a cautious tone on further easing on Tuesday, saying that the US central bank needs to continue balancing the competing risks of high inflation and a weak job market in coming policy decisions.
Meanwhile, San Francisco Fed President Mary Daly said on Wednesday that further rate reductions likely will be needed, as the central bank works to restore price stability and provide needed support to the labor market. However, Chicago Fed President Austan Goolsbee warned against a series of rate cuts.
Traders have priced in nearly a 43 basis points (bps) of rate cuts in the remaining two policy meetings this year, although remarks from policymakers indicated that the decision will depend on the upcoming inflation and labour data.
Rising UK fiscal worries following a significant increase in Britain’s public borrowings, along with a slew of downbeat UK economic data, might weigh on the Cable in the near term. Last week’s figures showed that public sector net borrowing hit £18 billion, the highest for the month in five years. Economists expected government borrowing to come in significantly lower at £12.8 billion.
