British Pound supported at $1.25?
The US dollar index is poised to reach a new multi-month peak. Contributing to DXY’s rise the most is the GBP/USD, with the pound losing 0.45% against the USD due to recent comments from the Bank of England’s governor.
On Wednesday, Governor Andrew Bailey spoke in front the Treasury select committee, saying " I think we are much nearer now to the top of the (tightening) cycle. And I'm not therefore saying we're at the top of the cycle because we've got a meeting to come”. In case you forgot, the Bank of England has implemented rate hikes in its previous 14 meetings, and it is expected to increase borrowing costs once more later this month, pushing the rate to 5.5%.
The above remarks were tempered by comments that suggest that rates will be higher for shorter than expected, saying “(we) are signaling that the fall in inflation will continue and - as I've said a number of times - I think will be quite marked.” It is this later comment that might be the cause for the British pound dipping beneath the crucial $1.25 level, marking its lowest value since early June. There might be support at this level though, as the bearish bias becomes potentially overextended.
The US dollar index is poised to reach a new multi-month peak. Contributing to DXY’s rise the most is the GBP/USD, with the pound losing 0.45% against the USD due to recent comments from the Bank of England’s governor.
On Wednesday, Governor Andrew Bailey spoke in front the Treasury select committee, saying " I think we are much nearer now to the top of the (tightening) cycle. And I'm not therefore saying we're at the top of the cycle because we've got a meeting to come”. In case you forgot, the Bank of England has implemented rate hikes in its previous 14 meetings, and it is expected to increase borrowing costs once more later this month, pushing the rate to 5.5%.
The above remarks were tempered by comments that suggest that rates will be higher for shorter than expected, saying “(we) are signaling that the fall in inflation will continue and - as I've said a number of times - I think will be quite marked.” It is this later comment that might be the cause for the British pound dipping beneath the crucial $1.25 level, marking its lowest value since early June. There might be support at this level though, as the bearish bias becomes potentially overextended.
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