British Pound softens below 1.3300 on hot US PPI, eyes on speeches from Bailey, Warsh
The GBP/USD pair declines to around 1.3270 during the early Asian session on Friday. The US September Producer Price Index (PPI) comes in hotter than expected, supporting the US Dollar (USD) against the British Pound (GBP).
The British Pound (GBP) weakened below 1.3300 against the US Dollar (USD) following the release of stronger-than-expected US Producer Price Index (PPI) data. The September PPI for the US rose 6.3% year-over-year in September, the largest increase since 2022, surpassing market expectations of 5.3%. Monthly growth was also higher at 1.3%, compared to analysts' estimate of 0.5%.
Additionally, PPI excluding food and energy increased by 0.7% monthly and 5% year-over-year. Despite the inflationary data, the Federal Reserve's upcoming speeches from Governor Andrew Bailey and Chair Kevin Warsh were expected to influence market sentiment. Traders now estimate a 29% probability of a Federal Reserve rate hike later in the month, according to the CME FedWatch tool.
The UK economy experienced a surprise growth of 0.1% in August, beating the expected 0.4% contraction. The Bank of England (BoE) is predicted to raise Bank Rate for the first time in over three years to 4.0% in November. Analysts highlight the potential for further tightening by the BoE, given the stronger-than-expected UK GDP figures.
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