The GBP/USD currency pair has once again picked up bids and has renewed its intraday height close to 1.2145. This followed the United Kingdom’s published inflation data for the month of July. The pair, thus, prolonged its recovery from the previous day off from its weekly low levels.
Upbeat Data but High Inflation
The consumer price index from the United Kingdom increased to 10.0% year-on-year against 9.8%, which was expected and the initial figure of 9.4%. Whereas the central consumer price index minus energy and food items also increased to 6.2% against the market’s expectation of 5.9% and the last reading of 5.8%.
GBP/USD price chart. Source TradingView
It is not only about the consumer price index, but the increased retail price index got up to 12.3% year on year. It comes against the market’s bet of 12.0% and the last reported reading of 11.8%. All these favored the GBP/USD pair buyers in the face of criticisms against the Bank of England for treating inflation with kid gloves.
The front runner for the office of the British Prime Minister, Liz Truss, has been one of the heaviest critics of the Bank of England.
Aside from the strong UK inflation data, the US Dollar’s relapse while expecting the Federal Open Market Committee’s minute gave strength to the pair’s bullish traders. The US Dollar index renewed its high shots for the past three weeks before it pulled back from 106.94. The index, therefore, lost 0.10% and sat close to the intraday low level of 106.35.
The Import Meeting Minute
The Dollar index’s loss might be connected with the market’s expectation of some significant events in the midst of the Federal Reserve’s hawkish disposition.
Reuters reported that investors are now seeing high possibilities of another 75 basis points rate increase. If it happens at the Fed’s coming meeting scheduled for September, it would then become the third one in a row. The market is expecting the minutes of the FOMC meeting at any moment now.
The US ten-year Treasury yields have faded off the previous day’s recovery, and the S&P futures oscillated close to the four months’ high level. These happen against the Fed minute’s background.
After seeing the first reactions toward the United Kingdom’s data, the American retail sales data for the month of July will come before the Fed’s minute. The report will be highly significant to traders of the GBP/USD currency pair in the midst of the latest Fed’s hawkishness.