British Pound (GBP) Latest: GBP/USD Shrugs off Inflation Data, Steady Pre Fed
GBP price, Brexit news and analysis:
- UK inflation fell in August to its lowest level for nearly five years but was above expectations, leaving GBP little changed.
- Looking ahead, the near-term direction of GBP/USD will be determined by the Federal Reserve’s monetary policy decisions ahead of the Bank of England meeting Thursday.
- The UK Government is talking to rebels to smooth the path for its Internal Market Bill that would break the Brexit divorce treaty.
GBP/USD range trading ahead of Fed, BoE
GBP/USD is trading in a narrow range ahead of the Federal Reserve’s monetary policy decisions due to be announced after the close of European markets Wednesday at 1900 BST. Those decisions will likely determine whether the pair breaks upwards or downwards, although it may continue to range trade until the Bank of England’s policy announcement Thursday. Neither central bank will move interest rates so the focus will on whether their statements are hawkish or, as expected, dovish.
In the meantime, there has been little reaction to the latest UK inflation data. The headline rate dropped to 0.2% year/year in August, its lowest for nearly five years and down from 1.0% in July. However, that was above the zero forecast by analysts and was shrugged off by Sterling traders.
GBP/USD Price Chart, One-Hour Timeframe (September 10-16, 2020)
Chart by IG (You can click on it for a larger image)
Data and monetary policy aside, the main focus for Sterling traders continues to be Brexit as the UK Parliament debates the Internal Market Bill that would break the UK’s Brexit treaty with the EU. The Government is currently talking to rebels within the ruling Conservative Party to ease its passage and Justice Secretary Robert Buckland said Wednesday that he believes there is a way through.
So far, the markets have taken this in their stride and will likely continue to do so as the UK and the EU continue to talk on a so-far-elusive post-Brexit trade deal.
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--- Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.