Pound Rebound Hinges on US Inflation Data Amid Global Bond Market Turmoil
The Pound to US Dollar exchange rate has been volatile over the past week due to turmoil in the global bond market. The GBP/USD traded at around $1.3499, down about 0.3% from the start of last week's session.
Market risk aversion fueled the US Dollar's gains early in the week as investors worried about inflation and fiscal sustainability. However, these fears eased mid-week, leading to a decline in the Greenback's value.
The Pound faced pressure throughout the week due to concerns over UK growth and bond market turmoil, with yields on benchmark 10-year UK gilts reaching 19-year highs. This has raised questions about the Bank of England's monetary policy and its impact on Sterling.
This week, the focus will be on US inflation data, which could influence Fed rate hike expectations. A cooling inflation rate may cause a sharp decline in the US Dollar, while a deceleration in UK growth could put more pressure on the BoE to maintain an accommodative policy.