Several Federal Reserve policymakers plan to continue with lower interest rates due to a challenging path to inflation. They anticipate three rate cuts in 2024, which may impact the US dollar. On Thursday, US and UK gross domestic product (GDP) data will be released.
Despite the recent monthly increase in inflation, Fed Chairman Jerome Powell stated last week that price pressures will continue to ease. He also mentioned that it may be appropriate to cut interest rates later this year. Most officials at the US central bank anticipate three rate cuts in 2024. These statements have made the Fed’s stance more dovish and have caused a recent decline in the value of the US Dollar (USD).
However, Catherine Mann, one of the Bank of England’s most assertive policy makers, cautioned that financial markets are anticipating too many interest rate cuts this year and that the Bank of England is unlikely to take any action before the US Fed. ‘I think they are expecting too many cuts,’ Mann said. On Thursday, traders will focus on the U.K. GDP growth data, which is estimated to have contracted by 0.3 percent in the fourth quarter compared to the previous quarter and by 0.2 percent compared to the same period last year. If the GDP growth data is stronger than expected, the Pound Sterling (GBP) could strengthen, providing a tailwind for the GBP/USD pair.
Trading recommendation: Trade with buy orders when the price reaches 1.2635. Sell at the price level of 1.2590.
Origin: FreshForex
