The British Pound showed strength versus the US Dollar on Friday, hitting the mark of 1.3160 in Asian trading sessions. Because of expectations, the FED may lower rates in December; the GBP got a lift—CME FedWatch now shows a 71% chance, compared to 66% a day earlier. On the other hand, sentiment across markets held steady, especially in metals and commodities, as investors waited for fresh US economic numbers before making moves.
The dollar dipped a bit when Fed chief Jerome Powell said leaders are struggling to handle inflation alongside employment trends. Yet he noted rate changes could be delayed since fresh data isn’t coming in while the government shutdown continues. The majority of policymakers supported the central bank’s decision to only lower its key rate by 0.25%.
There is no doubt that the Pound is facing pressure, as the inflation has been weak and the Bank of England is expected to make rate cuts. Food prices are falling, as per the report from the British Retail Consortium. It has added more to speculation. The leader of the opposition, Keir Starmer, hints that tax hikes may be needed; however, reports suggest the Office for Budget Responsibility may cut productivity forecasts, leaving a £20 billion funding gap.
