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GBP/USD steadies near 1.3610 as Fed hike odds fade

CME FedWatch pricing shows a September US rate hike chance at 32.7%, down from 47% a month earlier, supporting GBP relative strength.

Reported · Written up by our desk · Major Pairs

GBP/USD was quoted around 1.3610 in early European trading on Thursday, holding positive territory as the US Dollar weakened against the British Pound. FXStreet attributed the move to fading expectations for additional Federal Reserve rate hikes and to Treasury bond buybacks.

The outlook for the Fed was pressured by upcoming US data, including Initial Jobless Claims, and by recent signals that a softer US jobs picture and milder inflation reduced bets on tighter policy. FXStreet said the probability of a September rate hike has fallen to 32.7% from 47% a month earlier, according to the CME FedWatch Tool.

FXStreet also pointed to the Fed’s July meeting minutes, which indicated many policymakers saw further rate hikes as likely if inflation did not decline. The Fed kept the federal funds rate targeted in a 3.5% to 3.75% range last month, while City economists and money market pricing expect one Bank of England rate hike by year end, lifting the Bank rate from 3.75% to 4.0%.

On the technical side, GBP/USD stayed above the 20-period Bollinger middle band and the 100-day simple moving average, with the RSI at 68.7 nearing overbought territory, FXStreet said. Support was flagged near the August 18 low at 1.3519, with deeper levels around 1.3290, while a break above 1.3645 could target 1.3700.

Latest closeGBP/USD 1.354 ▲0.3%

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