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GBP/USD
Source: Newsmaker.id
The pound sterling traded flat on Friday (Sept. 11), despite UK economic growth data coming in stronger than expected. GBP/USD dipped slightly by about 0.06% to 1.3504, while EUR/USD weakened 0.09% to 1.1599 as investors braced for US inflation data.
The dollar regained support from rising long-term Treasury yields. Markets observed a recovering positive correlation between the dollar and yields after a smaller-than-expected US Treasury buyback operation failed to ease pressure in the bond market. These conditions have made a target of 100 for the Dollar Index appear realistic once again.
A roughly 15% surge in oil prices since tensions escalated in the Gulf region also triggered a defensive shift toward the dollar. Investors anticipate US CPI data showing a 0.4% monthly rise in the headline figure and 0.2% in the core figure, which could reinforce expectations of a Federal Reserve rate hike next week.
In the UK, GDP grew by 0.4% in July, beating forecasts and exceeding the 0.3% rise seen in June. However, the data failed to provide a significant boost to sterling, as markets remained focused on rising global yields and expectations regarding US monetary policy. UK 10-year gilt yields approached 5.5%, while 30-year yields hovered near 6%.
The Bank of England is expected to keep interest rates at 3.75% at its next meeting. Nevertheless, some members are likely to continue supporting a rate hike, even though market expectations for nearly four rate increases through next year are considered overly aggressive.
The euro also received some support from the ECB's hawkish stance following the central bank's rate hike and signals of potential further tightening. However, downside risks for EUR/USD remain if US CPI data comes in hot, reinforcing expectations of Federal Reserve rate hikes.
Newsmaker Analysis: Sterling has yet to capitalize on strong UK GDP data, as global sentiment remains driven primarily by the dollar, Treasury yields, and Federal Reserve expectations. US CPI stands as the next key catalyst; should inflation exceed forecasts, the DXY could edge closer to the 100 mark, while GBP/USD and EUR/USD risk facing renewed downward pressure. (arl)
Source: Newsmaker.id