The British Pound fell 0.39% against the US Dollar on Friday as sticky US inflation data reignited expectations of further Federal Reserve rate hikes before year-end. The latest Personal Consumption Expenditures report showed prices remain stubbornly elevated, prompting a sharp Dollar recovery across major currency pairs. Sterling bore the brunt of the greenback’s strength as traders rapidly repriced Fed policy expectations, now factoring in the possibility of at least one more interest rate increase in late 2023.
The inflation print caught forex markets off guard, reversing earlier Sterling gains and sending the Pound lower as US Treasury yields climbed. Currency traders and brokers should prepare for continued volatility in GBP/USD as the divergence between Fed and Bank of England policy trajectories becomes more pronounced. The data reinforces the Dollar’s appeal as traders bet on higher-for-longer US rates despite recent market optimism about Fed easing.
FXnCO Insight
Position for extended Dollar strength against Sterling with tight stops, as further PCE surprises could accelerate GBP/USD downside toward key technical support levels.
Source: FXStreet