GBP/USD hovers near 1.3350 as market participants weigh hawkish Federal Reserve signals against diplomatic optimism regarding the US-Iran conflict.
Tuesday's hot US consumer inflation figures reaffirmed the likelihood of a December Fed rate hike, and Governor Waller flagged openness to a larger 50-bps increase if October core CPI prints around 0.3% or higher. The FXS Fed Sentiment Index rose 3.17 points to 145.50, deep in hawkish territory, supporting a firmer Dollar path — though Iran diplomacy hopes cap safe-haven demand.
Two opposing forces offset each other: Tuesday's hot US CPI and Waller's openness to a 50-bps December hike strengthen the Dollar, while Iran diplomacy hopes and the BoE's hawkish second-round inflation warning support Sterling. The pair edges up to ~1.3350 from the 1.3300 area but faces Fibonacci resistance at 1.3365, leaving a neutral near-term bias.
The GBP/USD pair trades near 1.3350 during Wednesday's Asian session, recovering from recent lows near 1.3300. While hot US CPI data and Fed Governor Waller’s signal of a potential 50-bps December rate hike support the Dollar, hopes for a diplomatic resolution to the US-Iran war and a hawkish Bank of England outlook provide a floor for the Pound.
Tuesday's hot US consumer inflation figures reaffirmed the likelihood of a Federal Reserve rate hike in December, and Fed officials including Governor Waller pointed to the possibility of a larger 50-basis-point increase.
Investor hopes for a diplomatic resolution to the US-Iran war are keeping a lid on the safe-haven Dollar, with Rubio saying no major combat operations in Iran are needed.
Hopes for a diplomatic resolution to the US-Iran war are keeping a lid on the safe-haven Dollar, and the Bank of England's hawkish outlook supports the Pound, offsetting the Dollar boost from Tuesday's hot US CPI.
Resistance sits at 1.3365 and then 1.3419, while support is at 1.3322 and the 200-period SMA at 1.3314; a break lower would expose 1.3279, 1.3217 and 1.3138.