Pound moves higher, BoE points to pressure on consumers Somoybulletin

[ad_1]

  • BoE says consumer debt rising
  • Fed members say spike in Treasuries could lower inflation

The British pound is higher on Tuesday. In the North American session, GBP/USD is trading at 1.2273, up 0.29%.

The Bank of England’s financial policy committee (FPC) voiced concern about consumer borrowing. The FPC noted that consumers were taking longer mortgages and increasing spending on credit cards in response to being squeezed by higher interest rates and the cost-of-living crisis. These practices have raised concerns about consumer debt levels. The FPC found that the UK banking system was “relatively stable”.

The UK economy has been sputtering, and the IMF raised its 2023 growth forecast for the UK to 0.5%, up from 0.5% in the previous forecast. However, the IMF cut the 2024 growth forecast to 0.6%, down from 1.0% previously. The IMF noted that the BoE would need to maintain elevated interest rates into 2024 due to weak growth and sticky inflation.

High US yields could mean no further Fed hikes

US yields have been rising, and that could affect Fed rate policy. On Monday, Fed members Jefferson and Logan said the spike in long-term bond rates could mean less of a need for the Fed to raise rates. The reason is that borrowing had become more expensive and inflation could ease without the Fed needing to raise rates.

US 10-year yield rates rose as high as 4.8% last week, a 16-year high, compared to 4.0% in July. Higher yields on Treasuries have led to an increase in other borrowing costs, including mortgages and consumer loans. This could put the Fed’s hopes for a soft landing in jeopardy and are providing support for the Fed to hold rates until next year. The odds of a rate hike before the end of 2023 have dropped to 24%, compared to 39% just one week ago, according to the CME FedWatch Tool.

.

GBP/USD Technical

  • 1.2179 and 1.2097 are providing support
  • There is resistance at 1.2321 and 1.2403

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at [email protected]. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.



[ad_2]
Source link

Leave a Reply

Your email address will not be published. Required fields are marked *