GBP looks in need of more aggressive rate support.

GBP underperforms after another CPI overshoot. Economist at Scotiabank analyze Sterling outlook.Focus on BoE

The May data showed headline CPI rising 0.7% in the month (0.5% expected) and accelerating to 8.7% in the year. Core CPI rose to 7.1% in the year and my calculations show the 3m annualized core rate holding above 12%, underscoring the sharp pick up in core prices since the start of the year.

The data should seal a 25 bps hike from the BoE tomorrow, with swaps pricing in a slightly greater chance of 50 bps (32 bps priced in, from 28 bps prior to the data).The GBP, which slumped close to a cent on the USD around the data, looks in need of more aggressive rate support.

EUR/USD consolidates above 1.0900 on steady US Dollar, Powell eyed

EUR/USD is lacking a clear directional bias while fluctuating in a tight channel above 1.0900 on Wednesday. The pair is following the footprints of the sideways action in the US Dollar Index, as traders stay cautious ahead of Fed Chair Jerome Powell’s testimony.

EUR/USD News

GBP/USD holds above 1.2700 as focus shifts to Powell

GBP/USD briefly dropped below 1.2700 in the European session before staging a modest rebound. Despite hot UK inflation data for May, the risk-averse market atmosphere makes it difficult for Pound Sterling to find demand. Investors await Fed Chair Powell’s testimony.

GBP/USD News

Gold stays in daily range above $1,930

Gold price trades in a narrow band $1,930 on Wednesday after having declined sharply on Tuesday. The benchmark 10-year US Treasury bond yield stays calm near 3.75% ahead of FOMC Chairman Powell’s testimony, not allowing XAU/USD to gather directional momentum.