GBP/USD extends downside below 1.2700 ahead of BoE's Bailey speech

FXStreet
Updated
Mitrade
coverImg
Source: DepositPhotos

  • GBP/USD trades in negative territory for the fifth consecutive day near 1.2685 in Thursday’s Asian session. 

  • US inflation rose to 2.6% YoY in October, as expected. 

  • Investors await the BoE’s Governor Andrew Bailey speech on Thursday. 


The GBP/USD pair extends the decline to near 1.2685 during the Asian trading hours on Thursday. A rally in the US Dollar (USD) to the highest level since November 2023 weighs on the major pair. The Bank of England (BoE) Governor Andrew Bailey is set to speak later on Thursday. 

Data released by the US Department of Labor Statistics on Wednesday showed that the US Consumer Price Index (CPI) came in line with expectations, rising by 2.6% YoY in October. Meanwhile, the core CPI, which excludes the more volatile food and energy categories, climbed by 3.3% YoY in October, mating with the estimation. The markets expect the US Federal Reserve (Fed) to keep on track to reduce rates at their next meeting in December. 

“No surprises from the CPI, so for now the Fed should be on course to cut rates again in December. Next year is a different story, though, given the uncertainty surrounding potential tariffs and other Trump administration policies,” noted Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. 

Fed officials remain cautious on rate cuts. On Wednesday, Dallas Fed President Lorie Logan said that the US central bank should proceed cautiously on further interest rate cuts to keep from inadvertently reigniting inflation. Additionally, St. Louis Fed President Alberto Musalem stated that sticky inflation figures make it difficult for the US central bank to continue to ease rates. Traders raise their bet on another quarter-percentage-point rate cut in December, albeit at a slower pace, through mid-2025.

On the UK’s front, the BoE policymaker Catherine Mann said monetary policy is impacting inflation more quickly than economic theory suggests, allowing the central bank to wait before making big cuts to interest rates. Traders have fully priced in only two quarter-point rate cuts by the end of 2025, which would put the BoE lag behind other major central banks. 

Traders will take more cues from the BoE’s Bailey speech later on Thursday for fresh impetus. Less dovish comments from the UK central bank could underpin the Pound Sterling (GBP) against the GBP. 

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

goTop
quote
Do you find this article useful?
Related Articles
placeholder
DXY: Prelim PMIs on tap today – OCBCThe US Dollar (USD) remains better bid overnight. DXY was last above 107, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Author  FXStreet
23 hours ago
The US Dollar (USD) remains better bid overnight. DXY was last above 107, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
placeholder
AUD/USD: To trade in a range of 0.6490/0.6535 – UOB GroupThe Australian Dollar (AUD) is expected to trade in a range of 0.6490/0.6535.
Author  FXStreet
23 hours ago
The Australian Dollar (AUD) is expected to trade in a range of 0.6490/0.6535.
placeholder
AUD/JPY falls below 100.50 as the likelihood of a BoJ rate hike next month revivesAUD/JPY continues its decline, nearing 100.30 during the Asian trading hours on Friday.
Author  FXStreet
Yesterday 06: 50
AUD/JPY continues its decline, nearing 100.30 during the Asian trading hours on Friday.
placeholder
NZD/USD extends downside to near 0.5850 on stronger US Dollar, dovish RBNZ expectationsThe NZD/USD pair trades in negative territory for the third consecutive day near 0.5855 during the early Asian session on Friday.
Author  FXStreet
Yesterday 00: 57
The NZD/USD pair trades in negative territory for the third consecutive day near 0.5855 during the early Asian session on Friday.
placeholder
USD/JPY declines to near 154.00 even though US Dollar ticks upThe USD/JPY pair slides to near 154.00 in Thursday’s European session. The asset weakens even though the US Dollar (USD) edges higher, with the US Dollar Index (DXY) rising to near 106.70.
Author  FXStreet
Nov 21, Thu
The USD/JPY pair slides to near 154.00 in Thursday’s European session. The asset weakens even though the US Dollar (USD) edges higher, with the US Dollar Index (DXY) rising to near 106.70.
Real-time Quote