British Pound holds firm as USD rebounds from intervention rout

On Friday, the British Pound Sterling experienced a slight decline of 0.02%, while the US Dollar rebounded following a day of intervention, hitting a 30-day low. As of the writing, the GBP/USD exchange rate remained stable at 1.3458. Meanwhile, US economic data indicated that consumer sentiment improved, reaching 55.2, with inflation expectations staying consistent at 4.2% for a year and 3.3% for five years.

Joanne Hsu, Director of the Survey of Consumers, noted that all groups showed broad-based improvements in income, education, wealth, age, and political party. Despite the US economy growing at a slower pace than anticipated in the second quarter, the Fed's preferred inflation gauge, Core PCE, dropped by 0.1% in June. Fed Chair Kevin Warsh's lack of forward guidance and the expectation of only 23 basis points of tightening towards the end of the year reduced the odds of a September rate hike.

The three Fed dissenters voted for a rate hike, expressing their concerns about inflation risk and policy rate levels. The Bank of England maintained interest rates at their current level, while leaving the door open to potential future hikes due to uncertainty surrounding the US-Iran conflict. Analysts expect a 25-basis-point rate hike by the year-end, according to Prime Terminal data.

The Sterling's future hinges on the new Prime Minister, Andy Burnham, as fiscal health remains a concern. GBP/USD traded at 1.3469, maintaining a bullish bias on daily charts, with support around 1.3365 and 1.3375. The Relative Strength Index (14) indicated firm upside momentum, while the broader uptrend support line reinforced higher daily lows.

With no immediate resistance, the pair is likely to remain bullish as long as it holds between 1.3375 and 1.3365.