FX Weekly Overview (Brazil Issue)
Dollar to reflect US economic data, Central Bank minutes, inflation in Brazil, and the Middle East
Leonel Mattos
- Currencies
GBP/USD Pauses as Bank of England Wrestles Jobs and Inflation
By: Gustian Farrow, Head of StoneX TV • Content Channels
GBP/USD Pauses as Bank of England Wrestles Jobs and Inflation
Fiona Cincotta, StoneX Senior Market Analyst, assesses the Bank of England’s policy stance as rates remain at 4% amid a fragile UK economy and stubborn inflation.
Key Takeaways
- Bank of England expected to hold rates at 4%
- Inflation and wage growth remain above target levels
- Sterling strengthens on policy divergence with the Fed
Economic Growth Stagnates
Cincotta notes that the UK economy flatlined in July with 0% growth, adding pressure on the Chancellor ahead of the autumn budget. Job openings have declined by 5.8% and unemployment has risen to 4.7%, marking an almost four-year high.
Inflation and Wage Pressures Persist
CPI rose to 3.8% year on year in August, a 19-month high and well above the Bank of England’s 2% target. Wage growth remains sticky at 4.8%, which continues to fuel concerns over entrenched inflation despite weakness in the labor market.
Policy Outlook Remains Hawkish
Governor Andrew Bailey has noted that uncertainty remains over the timing of future rate cuts. “There is considerable doubt over the timing of the next rate cut” adds Cincotta. Forward guidance is expected to push back expectations for easing until early next year.
Sterling Finds Support
The pound has broken above a key trend line, trading near 1.3650 and hitting a six week high. Momentum suggests buyers could extend gains towards 1.37 and 1.3790, the 2025 high, with support levels at 1.36 and 1.3475.
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--- Written by Gus Farrow, Head of StoneX TV
--- Expert: Fiona Cincotta, StoneX Senior Market Analyst
- Currencies
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