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Pound slides as stronger US PPI lifts odds of a September Fed hike
GBP/USD is down 0.2% to about 1.3525, after US annual producer inflation topped forecasts and pushed CME FedWatch odds for a 25 basis point move to nearly 70%.
FXStreet reports the British pound has lost traction versus the US dollar after a hot US producer inflation reading raised expectations that the Federal Reserve could turn more hawkish at its September meeting.
In the US, the Producer Price Index for August was 0.4% month over month, matching estimates, but rose 5.4% year over year versus 5.3% expected. Core monthly figures came in at 0.2%, below expectations of 0.3%, and the report said traders are increasingly confident in a rate increase.
Following the data release, the CME FedWatch Tool showed nearly a 70% chance of a 25 basis point hike in September. The piece also cited energy prices edging higher, with Brent above $100 per barrel and West Texas Intermediate nearing that level.
On the UK side, the article said Bank of England officials are split, but rates are expected to remain unchanged at the September 17 meeting, with Governor Bailey pushing back on calls for further tightening. It added that traders are awaiting US CPI on Friday, and UK GDP data expected to stall at 0% after June’s 0.3% month over month print.
Latest closeBrent $102.05 ▲4.2%