Pound Under Pressure as Mixed US Data Keeps Hawkish Bets Alive
The British pound has been experiencing pressure against the US dollar due to mixed US economic data. The Fed's hawkish monetary policy stance is keeping expectations alive, which supports the dollar.
The latest US economic releases presented a mixed picture, leaving investors uncertain about the Federal Reserve's next policy move. While some indicators pointed to resilience in the labor market, others suggested that inflationary pressures may be cooling, but not at a pace that would prompt the Fed to pivot towards rate cuts soon.
The ambiguity has kept the dollar broadly supported, as market participants continue to price in the possibility of further rate hikes. According to the CME FedWatch Tool, the probability of a 25-basis-point rate hike at the upcoming FOMC meeting stands at approximately 40%, reflecting the ongoing hawkish sentiment.
The pound's weakness is compounded by domestic economic challenges, including recent data showing a slowdown in wage growth and a cooling housing market. This divergence in monetary policy expectations is likely to keep the pound under pressure against the dollar in the near term.