The GBP/USD begins the week positively, gaining 0.23%.
The British pound is trimming some of Friday’s losses, though edges lower after printing a daily high at around 1.2279, but remains to gain some 0.12% amidst a thin liquidity session due to a US bank holiday. The GBP/USD is trading at 1.2252 at the time of writing.
A weak US dollar boosts the pound
The sentiment is positive, as shown by Europen equities and US futures markets. On Monday, the GBP/USD opened near the 1.2210s area and, albeit reaching a daily low around 1.2200, bounced off and edged slightly above the daily pivot point amid the lack of UK – US economic data. In the meantime, the US Dollar Index, a gauge of the buck’s value vs. a basket of rivals, is losing 0.29% and is currently at 104.351, a tailwind for the GBP/USD.
BoE and Fed officials cross wires
Nevertheless, once both central banks – the Fed and the BoE – had their monetary policy meetings, speakers from both banks began to cross wires.
Firstly, one of the dissenters on BoE’s Thursday decision Catherine Mann said that 50 bps moves reduce the risks of domestic inflation, boosted by a weaker pound. Mann said that the BoE should raise rates faster because the weakness in the pound’s value is adding to inflationary pressures. Mann added that inflation is becoming more embedded and persistent.
On the US side, Fed Governor Christopher Waller said he would support a 75 bps hike in July if data come in as he expects, reiterating that the central bank is all in on re-establishing price stability. Similarly, Atlanta’s Fed President Raphael Bostic said he supported the 0.75% increase last week and said the Fed needs to act decisively and affirmatively to get inflation under control.
Elsewhere, Cleveland Fed President Loretta Mester said that it would take “a couple” of years to get inflation back to 2%.
EUR/USD rises toward 1.0550 in choppy day
EUR/USD has regained its traction and climbed toward 1.0550 after having declined toward the 1.0500 area earlier in the day. ECB President Lagarde refrained from sharing any details on the new bond-buying tool and noted they were planning to hike key rates by 25 bps in July.
GBP/USD clings to modest gains near mid-1.2200s
GBP/USD continues to fluctuate in its daily range above 1.2200 and was last seen trading slightly above 1.2250. BOE policymaker Mann argued a 50 bps rate hike could help them tame inflation that is fueled by a weakening sterling.
Gold holding ground below $1,850.00
Gold hovers around $1,838, unchanged on a daily basis. The week started slowly amid a holiday in the US and a scarce macroeconomic calendar elsewhere. Stock markets took a breath from their recent collapse, with European indexes closing in the green and providing mild support to US futures.