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GBP/USD
Source: Newsmaker.id
The Pound Sterling weakened against the US Dollar during Wednesday's trading (Oct 7). The GBP/USD pair hovered around 1.3250, down approximately 0.2% after having strengthened the previous day. Pressure mounted as the US Dollar saw renewed demand ahead of the release of the FOMC meeting minutes. The Greenback's rise was also supported by concerns that surging oil prices could reignite inflationary pressures. The US Dollar Index climbed to around 102.07, while markets continued to price in the possibility of a Federal Reserve rate hike by year-end, even though the likelihood of an October increase had diminished.
From the UK, the Pound continues to draw support from expectations of a relatively tight monetary policy stance by the Bank of England. BoE official Catherine Mann warned that UK inflation could approach 4% by year-end, reinforcing the view that UK interest rates may need to remain elevated for longer.
Energy-related pressures are a key factor for both nations. Rising oil prices, driven by Middle East tensions, threaten to exacerbate price pressures in both the US and the UK. However, for the GBP/USD pair, short-term sentiment is currently driven primarily by Dollar movements and shifting expectations regarding Fed policy.
Markets are also keeping a close watch on the UK's fiscal situation ahead of the budget announcement on October 28. Concerns regarding the government's fiscal headroom could pose an additional risk to the Pound should investors demand a higher risk premium on UK assets.
Source: Newsmaker.id