Hawkish Fed Meeting Minutes Fail to Dent Pound US Dollar Exchange Rate

October 13, 2024 - Written by John Cameron

STORY LINK Hawkish Fed Meeting Minutes Fail to Dent Pound US Dollar Exchange Rate

The Pound US Dollar (GBP/USD) exchange rate fluctuated within a tight range on Thursday, even after the release of minutes from the Federal Reserve's recent policy meeting.

As the time of writing, GBP/USD stood at $1.3073, showing little change from the day's opening levels.

The US Dollar (USD) traded somewhat cautiously on Thursday, despite the hawkish tone of the Federal Reserve's meeting minutes released the previous evening.

The records from the US central bank's September policy meeting revealed that not all policymakers were in agreement with the substantial 50bps interest rate cut. Moreover, the minutes indicated that the Fed plans to adopt a more measured pace for future policy easing, dampening any remaining bets on another half-point cut in the near future.

Although USD initially strengthened following the release of the meeting minutes on Wednesday night, anticipation of the latest US inflation figures kept the currency's gains in check during Thursday's trading session.

The Pound (GBP) held its ground against the US Dollar on Thursday, buoyed by cautious optimism surrounding the UK's forthcoming Autumn Budget.

Reports that Chancellor Rachel Reeves intends to modify the government's fiscal rules to free up more funds for investment boosted the spirits of GBP investors. This development eased concerns that the upcoming budget would be marked by austerity measures, including tax increases and spending reductions.

Looking forward, the release of the US consumer price index on Thursday afternoon could potentially weigh on the US Dollar.

Economists predict that headline inflation slowed further in September, from 2.5% to 2.3%. If this expectation is met, it could fuel speculation of more interest rate cuts by the Federal Reserve, potentially driving the USD lower.

On Friday, the spotlight shifts to the UK with the release of its latest GDP figures. If the data indicates that the British economy grew in August, following two months of stagnation, the Pound could gain strength.

Additionally, Friday will see the release of the latest US producer price index. Could a deceleration in producer price inflation exert downward pressure on USD?

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TAGS: Pound Dollar Forecasts