British Pound finds relief as USD pauses, but inflation risks linger
The Pound Sterling trims some of its weekly losses, gaining over 0.18% against the US Dollar on Friday as the US Dollar takes a breather, even as US Treasury yields continue to rise.
The British Pound found a bit of respite after experiencing a weekly decline, gaining nearly 0.18% against the US Dollar on Friday as the US Dollar paused. Despite this, concerns about inflation persist. The Pound's rise to 1.3243 comes after it hit its lowest level of the day at 1.3209. Geopolitical tensions, particularly those between Iran and the US, continue to influence market sentiment.
Despite reports of a potential US-Iran phased deal, both countries have issued strong statements threatening retaliation if attacked. US President Trump claimed a successful meeting with Chinese President Xi Jinping, while Xi reiterated the US-China relationship is improving. Inflation expectations have risen, with a 4-year average increasing from 4% to 4.6%, and a 5-10 year average going from 3.3% to 3.4%.
The UK's oil price hike has put more pressure on inflation, prompting investors to expect more rate hikes from the Bank of England. Currently, traders anticipate 33 basis points of tightening from the Bank of England this year, with a 77% chance of an increase at the November meeting. The GBP/USD pair is trading near a bearish trend, with resistance at 1.3466 and overhead resistance lines at 1.3516 and 1.3723.
Technical analysis suggests buyers might target psychological levels or previous swing lows as potential support.
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