GBPUSD, often referred to as “The Cable”, a foreign exchange term used to describe the British pound vs the US dollar, is one of the oldest traded currency pairs. In July of 1866, after an earlier failed attempt, the first reliable exchange rate between the British pound and the US dollar was transmitted between the London and New York Exchanges. Optic fibre cables accompanied by satellites handle the Transatlantic communications today.
The Bank of England could now take a breath and reassess the situation as traders put interest rates in the rearview mirror.
Wages logged a record pace of growth and beat lowering inflation. But the pound didn’t catch on the good news.
The greenback is on the offensive again as markets are weighing prospects of another rate hike at the Fed’s September meeting.
UK shop price inflation hit 6.9% in August, notching its lowest level in almost a year. Traders kept piling their short positions.
The currency pair is just at the 50-day moving average intersection, pressing higher for a second consecutive day.
It’s the slowest price growth for the UK since February last year but core inflation remained stubbornly unchanged, complicating the Bank of England’s work.
The GBP/USD picked up momentum to top $1.2700 after the positive report, which surprised even the Bank of England.
Fitch Ratings cut its US debt rating but that couldn’t keep dollar buyers away. The GBP/USD is down again.
Forex markets are in for a treat today with Jay Powell taking the stage for the Fed’s interest rate decision.
The figures speak for themselves: a 7.9% inflation for June came in below estimates for 8.2% and well below May’s 8.7%.
Interest rates are also working in favor of the British currency, but economists warn they may soon hit economic growth.
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