GBP/USD Pushes Higher Due to US Dollar Weakness

 

The daily GBP/USD chart is bullish. Cable is in a good mood heading into the weekend, having recently recorded a one-month high at 1.2245. While sterling has gained a slight bid in the past two weeks, the increase, this week has been driven by a lower US Dollar.

The greenback, which has been a one-way trade since June of last year, is losing its luster after Fed Chair Powell said that the Fed might stop rate rises when appropriate, the first time this viewpoint has been expressed. Over the previous two days, the US dollar has dropped considerably across the board.

IS THE US DOLLAR (DXY) AT ITS MAXIMUM?

The Bank of England (BoE) will raise interest rates again next week, with the market currently expecting a 50 basis point increase. The BoE, like many other central banks, is attempting to keep up with inflation, which is forecast to reach double digits in the UK in Q3. According to the Office for National Statistics figures, the UK unemployment rate dropped to a 50-year low of 3.7 percent between January and March, printing at +0.5 percent in May compared to -0.2 percent in April (ONS). This robust background should give the Bank of England flexibility to raise interest rates by half a percentage point next Thursday, further supporting the Sterling.

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