GBP Holds Firm as USD Recovers from Intervention-Led Rout

The British Pound held steady against the US Dollar on Friday, despite the Greenback's recovery from intervention-led losses. The GBP/USD exchange rate was trading at around 1.3460, virtually unchanged from Thursday's low. This comes as the University of Michigan (UoM) reported an improvement in consumer sentiment, with the index rising to 55.2 from a preliminary reading of 54.4. However, inflation expectations remained elevated at 4.2% for one year and 3.3% for five years, according to Joanne Hsu, Director of the Survey of Consumers. 'Broad-based improvements were seen across all groups by income, education, wealth, age, and political party,' she noted. In contrast, the Federal Reserve's preferred inflation gauge, the Core PCE, fell 0.1% in June, reducing the likelihood of a September rate hike. Three Fed dissenters who voted for a hike expressed their concerns, with Dallas Fed Lorie Logan citing an upward tilt in inflation risk, Beth Hammack of the Cleveland Fed stating that the policy rate was not restrictive enough, and Neel Kashkari of the Minneapolis Fed advocating for a 25-basis-point increase. Meanwhile, the Bank of England (BoE) kept interest rates unchanged but left the door open to future hikes due to uncertainty over the US-Iran conflict. The BoE's decision was seen as keeping monetary policy tightening on the table, with markets still expecting a 25-basis-point rate hike by year-end. Sterling's fate remains tied to the new Prime Minister Andy Burnham, as investors remain concerned about the UK's fiscal health.