Key points:
- Sterling hits 2024 high at $1.3055.
- Weaker dollar boosts pound’s value.
- Jackson Hole to lay hints on US rate cuts.
British currency rose to a fresh high of the year as both sides of the Atlantic churned out data in favor of a stronger pound. A weaker dollar was the cherry on top of the cake.
- The
GBPUSD advanced early Wednesday to break out into the rarefied air of 2024 highs. The British pound sterling jumped above $1.3055 for the first time this year amid a flurry of favorable economic data on both sides of the Atlantic. The Bank of England, on the one hand, has signaled it will likely keep interest rates steady at its September meeting in order to allow the UK economy to stay a little less volatile. - Traders, however, expect at least two cuts of 25bps from the current 5% benchmark rate by the end of 2024. Slowing growth in the UK also contributed to the pound’s rise. The UK economy expanded slightly to 0.6% in the second quarter of the year, indicating a pullback. This likely prompted Bank of England officials to hold back from too aggressive monetary policy measures aimed at lowering borrowing costs.
- Stateside, the US dollar has been shunned by traders in the lead-up to the Jackson Hole event. An annual gathering of central bankers and financiers, the forum is keenly anticipated due to market-moving speeches by prominent figures in finance. Jay Powell, chairman of the Federal Reserve, will wrap it up on Friday with remarks on interest rates. Traders will be looking for clues into whether the Fed is planning a 25bps or a 50bps cut to borrowing costs in September.
