GBP/USD Hits Three-Month High Amid Fed Rate Hike Bet Repricing
The Pound to US Dollar exchange rate has reached a three-month high amid a dovish repricing of Federal Reserve interest rate hike bets. The GBP/USD pair is trading at around $1.3539, up 0.3% from the start of last week's session.
Last week saw mixed trade in the US Dollar, with support garnered amid ongoing uncertainty in the Middle East and a collapse in odds of a Fed rate hike next month. However, a worrying spike in US long-dated borrowing costs and a shock slump in domestic retail sales in July led to a clear USD selling bias.
The Pound trended broadly higher through the first part of last week, but lost steam as investors voiced scepticism about the UK's economic growth prospects. The latest GDP figures showed a healthy 0.4% expansion in the second quarter, but this failed to ignite support among GBP investors.
In the coming week, high-tier UK economic data will be released, including jobs and inflation reports that carry significant weight for Bank of England rate expectations. If these data suggest persistent price and wage pressures, Sterling is likely to rally. The spotlight will also centre on the minutes from the Fed's latest policy meeting, which may provide clues about whether policymakers are likely to back an interest rate hike later in the year.