The GBP/USD pair is trading with a slight positive bias around 1.2670 on Friday. Federal Reserve officials have indicated that inflation may take longer to reach their target, leading to the need for higher rates for an extended period. Bank of England’s Megan Greene has mentioned the importance of waiting for more data on easing price pressures before considering rate cuts.
During the early Asian session, the GBP/USD pair is showing small gains near 1.2670 while the USD Index (DXY) is recovering from recent lows near 104.00. The Fed remains cautious about inflation and potential rate cuts, with investors closely watching speeches from Fed officials Kashkari, Waller, and Daly later in the day.
Federal Reserve officials have stressed the importance of maintaining high borrowing costs until there is clear evidence of easing inflation. This cautious stance has supported the US Dollar and weighed on the GBP/USD pair. Additionally, the number of Americans filing jobless claims rose slightly, according to the US Department of Labor.
On the UK front, the Bank of England is monitoring inflation trends and considering a possible rate cut in the future. BoE policymaker Megan Greene has highlighted the need for more data on price pressures before any policy adjustments are made. The expectation of a potential rate cut by the BoE before the Fed could impact the Pound Sterling and limit the upside of the GBP/USD pair in the short term.