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GBP/USD
Source: Newsmaker.id
The pound sterling weakened against the US dollar during Asian trading on Wednesday (August 26). The GBP/USD pair showed a negative bias below the 1.3650 level, erasing some of the strong gains made in the previous session.
Despite the pullback, the currency pair remains close to the six-month high reached last Friday. Market sentiment is cautious as investors await the release of the US Personal Consumption Expenditures (PCE) price index as a fresh catalyst.
PCE data is a key focus as it is one of the Federal Reserve's preferred inflation indicators. Additionally, a speech by Fed official Kevin Warsh at the Jackson Hole symposium on Friday is being closely watched for clues regarding the future direction of US interest rate policy.
Pressure on the US dollar remains tempered by communication regarding the Fed's direction. DBS Bank suggests Warsh needs to clarify how the Fed will manage market expectations without clear forward guidance, as well as the boundaries of the policy relationship between the Fed and the US Treasury Department.
Market expectations for a Fed rate hike are also beginning to cool. Milder US inflation data and a slowing labor market have led investors to increasingly speculate that the Fed will hold interest rates steady at its September 15–16 meeting.
Further support for GBP/USD stems from the US Treasury's bond buyback strategy. Two senior officials indicated that the Treasury could utilize nearly US$1 trillion from its General Account to fund the repurchase of long-term bonds; this move has helped suppress Treasury yields and weigh on the US dollar.
On the geopolitical front, hopes for US-Iran diplomacy have resurfaced after Iran announced the resumption of talks with Oman regarding the regulation of commercial shipping traffic in the Strait of Hormuz. This development pushed oil prices to a nearly two-week low and eased some concerns regarding energy-driven inflation.
The US has also reportedly offered sanctions relief to Iran and a lifting of maritime blockades in exchange for the reopening of the Strait of Hormuz and a halt to attacks by Tehran's regional proxies. Hopes for a diplomatic resolution have also limited safe-haven support for the US dollar. Newsmaker Analysis: The current correction in GBP/USD appears limited, as pressure on the US dollar has not yet fully subsided. With Treasury yields falling, expectations for Federal Reserve rate hikes easing, and oil prices undergoing a correction, the pound is holding near recent highs. However, the 1.3650–1.3700 range serves as a key resistance zone. If PCE data comes in softer and Warsh’s remarks are not hawkish, GBP/USD could retest this area. Conversely, if US inflation proves hotter than expected, the US dollar could rebound, pushing the pound back down to the 1.3550–1.3500 range. (asd)
Source: Newsmaker.id