Skip to content GBPUSD Fundamental Analysis – 23-September-2024
The GBP/USD has surged to its highest value since March 2022, reaching $1.33. This increase followed the Bank of England’s decision to keep interest rates unchanged at 5% during its September 2024 meeting.
The bank’s decision to maintain a steady rate aligns with market expectations. Officials emphasize a continued, cautious approach to monetary policy adjustments.
Market Expectations and Interest Rate Predictions
Investors have revised their expectations for future rate cuts by the Bank of England, predicting a decrease of about 42 basis points by the end of the year. This is a reduction from the previous forecast of 52 basis points before the bank’s announcement.
Comparison with U.S. Federal Reserve Actions
In contrast, the U.S. Federal Reserve has opted for a more aggressive policy shift, reducing rates by 50 basis points. The Fed has also indicated the likelihood of further cuts in the coming months and into the next year. This move has weakened the U.S. dollar, which, in turn, has positively impacted the British pound.
- Also read: EUR/USD Fundamental Analysis – 23-September-2024
Inflation Trends in the UK
Despite these monetary adjustments, the UK’s annual inflation rate held steady at 2.2% in August, matching forecasts. Notably, services inflation rose to 5.6%, precisely as anticipated.
Core inflation, which excludes volatile items like food and energy, slightly exceeded expectations, reaching 3.6% versus the projected 3.5%. However, both the overall inflation rate and services inflation remain below the levels previously projected by the Bank of England in August.
Conclusion: Stability Amid Global Fluctuations
The Bank of England’s decision to maintain the current interest rate has strengthened the British pound, signaling stability amid global economic uncertainty. In contrast, the U.S. dollar has weakened due to the Federal Reserve’s more aggressive rate cuts.
With inflation rates holding steady and closely aligning with projections, the economic outlook in the UK reflects cautious optimism and strategic planning, fostering a stable financial environment and encouraging investor confidence.
About The Author
Comments are closed.