GBPUSD rises ahead of Jerome Powell’s testimony
GBPUSD rose modestly in the morning trading on Wednesday in the European market, especially after the latest British Consumer Price Index (CPI) data that supported expectations that the British Central Bank will tighten its monetary policy soon.
The GBPUSD pair traded at the level of $1.3862, up by 0.4% from the opening level of today’s session at $1.3810, after it closed yesterday’s trading down by 0.5% for the second day in a row, following the inflation data released by the US economy, which came better than expected, which increased the chances of the Federal Reserve tightening its monetary policy.
GBPUSD is waiting for Jerome Powell’s testimony
Sterling against the US dollar reacted moderately to the latest UK inflation data, figures showed that the headline CPI rose 2.5% in June, the highest increase since August 2018, and higher than May’s reading of 2.1%. The median estimate of 2.2%, the CPI was above the Bank of England’s target of 2.0%, in the decision of the last BoE meeting, Andrew Bailey said that inflation in the country would peak at around 3%.
Core CPI excluding volatile food and energy prices rose 2.3% in June after rising 2.0% in May, these annual gains come from a low base bearing in mind that UK inflation fell sharply in June 2020 amid the pandemic.
In fact, monthly data showed that CPI and core CPI fell to 0.5% in May, so the BoE is likely to maintain its policy when it meets later this month.
The biggest catalyst for the GBP/USD will be Federal Reserve Chairman Jerome Powell, who will testify before the House Financial Services Committee later today, in this testimony, he will present his semi-annual monetary policy update.
US inflation data
This testimony is noteworthy because it comes a day after relatively strong US consumer inflation data, as figures showed that the core CPI rose to 5.2% in June while the core CPI rose to 4.2%, which was the highest level since 1991, so Analysts will watch his tone on future monetary policy.
The testimony also comes a week after the Federal Reserve published its latest meeting minutes which showed that some committee members started talking about tapering and, more importantly, other banks such as the Reserve Bank of New Zealand started to reduce their asset purchases.
Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.