The British Pound shows a slight increase of 0.15% against the US Dollar on Wednesday as market participants anticipate the results of the Federal Reserve’s monetary policy decision. Nonetheless, the Sterling appreciates as the inflation data in the UK supports the Bank of England’s predictions of maintaining rates on Thursday. GBP/USD is currently positioned at 1.3661 following a rebound from daily lows of 1.3629.
GBP/USD rises as UK inflation remains steady at 3.8% YoY, while core CPI decreases to 3.6%. The Federal Reserve is anticipated to reduce rates by 25 basis points to a range of 4.00%–4.25%, although there may be dissenting opinions as Miran advocates for a 50 basis point cut. US Housing Starts have decreased by 8.5%, reaching the lowest level since May.
> The Pound appreciates by 0.15% as market participants focus on the Federal Reserve’s anticipated 25 basis points cut and the accompanying dot plot guidance: Later in the day, the Fed is anticipated to lower rates by 25 basis points to the 4.00%-4.25% range. The decision is anticipated to lack unanimity, given that US President Donald Trump’s appointee Stephen Miran may advocate for a 50-basis-point reduction. TD Securities noted that Fed Chair Jerome Powell “is unlikely to commit to the future path of rate cuts,” indicating that upcoming meetings will be active, allowing the Fed to maintain flexibility should inflation begin to rise again. Market participants will analyze the updated Summary of Economic Projections and the dot plot for insights into the future trajectory of interest rates. In August, US Housing Starts experienced a decline, reaching the lowest point since May. Starts experienced a significant decline of 8.5% month-over-month following a rise of 3.4% in July, decreasing from 1.429 million to 1.307 million. Building Permits experienced a decline of 3.7%. In the UK, August’s inflation rate aligned with projections, registering at 3.8% year-over-year. Core CPI decreased from 3.8% to 3.6% YoY, with both reported figures consistent with the BoE’s most recent forecasts. The data solidified the rationale for the BoE to maintain rates at 4% on Thursday. Nonetheless, a Reuters poll indicated that economists anticipate at least one additional reduction in 2025.