GBP/USD extends rally above 1.3100, focus on BoE’s Bailey and Fed’s Powell speeches
■ GBP/USD gathers strength near 1.3105 in Friday’s early European session.
■ Fed’s Collins said it will soon be appropriate to start cutting rates as data amid progress on inflation.
■ The first reading of UK August PMI data came in stronger than expected, pushing back the expectation of a BoE rate cut.
The GBP/USD pair trades in positive territory for the seventh consecutive day near 1.3105 during the early European session on Friday. The confidence of investors that the US Federal Reserve (Fed) will start easing monetary policy in the upcoming September meeting continues to undermine the US Dollar (USD) broadly.
The Bank of England (BoE) Governor Andrew Bailey and Fed Chair Jerome Powell's speech at the Jackson Hole Symposium on Friday will be in the spotlight and might give a clearer direction about the interest rate path. The minutes of the July 30-31 FOMC meeting showed that the majority of Fed policymakers backed the case for a rate cut next month amid progress in bringing down inflation to the target. On Thursday, Boston Fed President Susan Collins said that it will soon be appropriate to start cutting rates as data on inflation are consistent with more confidence inflation getting back to 2%.
On the other hand, investors slightly pushed back their expectations on a Bank of England (BoE) interest rate cut in September after the upbeat Purchasing Managers' Index (PMI) reports. This, in turn, further boosts the Pound Sterling (GBP) against the Greenback. Data released by the Chartered Institute of Procurement & Supply and S&P Global on Thursday showed that preliminary UK Composite PMI beat the estimation, jumping to 53.4 in August from 52.8 in July.
Meanwhile, Manufacturing PMI rose to 52.5 in August versus 52.1 prior, better than the 52.1 expected. The Services figure climbed to 53.3 in the same month from 52.5 in July, above the consensus of 52.8. The markets are now pricing in less than 30% odds of a BoE September rate cut after Thursday's PMI data.
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