GBP Plummets as Fed Chair Emphasizes Inflation Control, Rate Hike Odds Rise to 43%
The British Pound (GBP) tumbled against the US Dollar (USD) on Friday as Federal Reserve Chair Kevin Warsh emphasized inflation control, boosting the likelihood of a rate hike in September.
Warsh reaffirmed that the Fed's target of 2% PCE is firm and fixed, stating that inflation hasn't improved as expected. He also acknowledged consumer spending and a stable labor market but expressed concerns about price stability.
The US Dollar Index (DXY) rose by over 0.38%, while US Treasury yields increased nearly 1.5 basis points to 4.686%. The odds of a rate hike at the September meeting jumped to 43% from 34% a day prior, according to Prime Terminal's interest rate probability tool.
Despite this, the GBP/USD price remains above the cluster of reclaimed supports around the mid-1.34s and holds a constructive bullish bias. However, any pullback is likely to find first demand near 1.3487 before reaching deeper support at 1.3392.