Daily digest market movers: Pound Sterling trades close to 10-day high of 1.2500
- The Pound Sterling holds strength near a ten-day high at around the psychological figure of 1.2500 against the US Dollar. The Cable remains upbeat as the US Dollar has come under pressure after the preliminary United States Gross Domestic Product (GDP) growth in the first quarter turned out weaker than expected.
- The US Bureau of Economic Analysis (BEA) reported on Thursday that the economy expanded at a slower pace of 1.6% in Q1, below expectations of 2.5% and the prior reading of 3.4%. Despite the data miss, traders maintain strong bets for the Federal Reserve to start reducing interest rates from September or in the fourth quarter as the GDP Price Index was significantly higher. The inflation measure rose to 3.1% from the prior reading of 1.7%.
- Meanwhile, investors shift focus to the core Personal Consumption Expenditures (PCE) Price Index data for March, which will be published at 12:30 GMT. Core PCE inflation is expected to have grown steadily by 0.3% on a month-on-month basis, with annual figures softening to 2.6% from the 2.8% recorded in February.
- Stubborn inflation data could allow the Fed to maintain a hawkish rhetoric. Fed policymakers have been reiterating that interest-rate cuts are only appropriate when they are convinced that inflation will return sustainably to the 2% target.
- After the underlying inflation data, investors will focus on the Fed’s monetary policy decision, which will be announced on Wednesday. The Fed is widely anticipated to keep interest rates unchanged in the range of 5.25%-5.50%. Investors will keenly focus on the Fed’s guidance for interest rates.
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