GBP/USD Extends Rally as Dollar Weakness Continues
The Pound to Dollar exchange rate (GBP/USD) continued its upward trend, reaching around 1.3464 on Thursday evening, a gain of 0.7% as softer US inflation and a dovish interpretation of the Federal Reserve's decision weighed on the Dollar.
Sterling received limited support from the divided Bank of England vote, which kept interest rates at 3.75%. Barclays warned that month-end portfolio rebalancing could generate renewed Dollar demand against the Pound, potentially interrupting Sterling's rally.
The Federal Reserve left its target range unchanged on Wednesday, although three members preferred an immediate quarter-point increase. Markets focused on the absence of a rate hike and Fed Chair Kevin Warsh's subsequent comments, which Citi interpreted as dovish.