GBP/USD remains subdued for the second successive day, trading around 1.3590 during the European hours on Thursday.
The pair depreciates as the US Dollar (USD) remains stronger following the robust economic data released on Wednesday
July’s PCE price index accelerated to 0.2% month-on-month, edging past the 0.1% consensus, while the annual rate remained at 3.7%, against the expected 3.6%. This surprise uptick has reinforced market bets that the Federal Reserve could deliver one final rate hike before year-end, leaving investors eagerly awaiting policy cues from Fed Chair Kevin Warsh’s speech at the upcoming Jackson Hole symposium. Crude oil prices continued to slide following diplomatic headway in the Middle East, where Iran and Oman agreed on territorial waters and revenue-sharing along the Strait of Hormuz, easing immediate inflation anxieties.
Meanwhile, fiscal scrutiny intensified over the US Treasury’s plan to double bond buybacks, a move sharply criticized by billionaire investor Stanley Druckenmiller as detrimental to market credibility and a missed opportunity for meaningful debt reform. Pound support erodes as softer BoE expectations weigh on yield spreads Strategists at Scotiabank observe that recent fundamental news flow for the Pound has been relatively light, with attention focused on “disappointing second-tier CBI business sentiment data” and a shift in the policy outlook. They note that “BoE rate expectations have softened somewhat, eroding fundamental support via yield spreads,” leaving the currency more vulnerable in the near term as yield-based support diminishes.