Traders await July’s US PCE report, expected to show core inflation rising 3.3% YoY, influencing Fed policy signals.
The GBP/USD pair fell to near 1.3625 in early European trading as the USD regained ground ahead of key US inflation data. Markets are cautious before the release of July’s Personal Consumption Expenditures Price Index, which could shape Federal Reserve rate expectations.
Economists forecast core PCE, excluding food and energy, to rise 3.3% year-over-year, reflecting persistent inflationary pressures. The US Treasury’s decision to double bond buyback operations to $4 billion per auction has had mixed effects on the USD, initially weighing on the currency before a partial recovery.
Attention now shifts to Fed Chair Kevin Warsh’s speech at the Jackson Hole symposium on Friday, where hawkish remarks could further support the USD.