GBP trades higher ahead of US data

Daily Currency Update

The Pound gains some positive traction today for the second successive day. Recovering further from its lowest level since June 13th, during the Asian session, up over 0.15% for the day to 1.2631.

The British pound has taken higher grounds against a softer US Dollar. Retreating US Treasury bond yields the US Dollar away from a near three-month top last week, which, in turn, is seen as a key factor pushing the GBP/USD pair higher. The British Pound draws support from the Bank of England Deputy Governor Ben Broadbent's remarks on Saturday, where he mentioned that policy rates may well have to remain in restrictive territory for some time adding strength to the pound and bringing support to pound sellers and US Dollar buyers. Markets have widely anticipated growing acceptance that the Bank of England will pause its rate-hiking cycle after the widely anticipated 25 bps lift-off at the September meeting might further contribute to some resistance in the pound’s strength.  

It’s worth noting what Fed Chair Jerome Powell said on Friday stating that inflation remains too high and that the Central Bank is ready to continue hiking rates to tame persistently high prices, with a resilient U.S. economy, what we know is that interest rate rises are seen as positive for the currency while the central banks try their hardest to quell inflation and introduce stability, which could help the US Dollar draw support against major currencies.