The British Pound to US Dollar (GBP/USD) exchange rate extended its recovery on Thursday, rising towards the 1.2500 level as UK inflation figures beat forecasts and buoyed Sterling sentiment. The pair rose to a session high of 1.2465 following the data release, with investors now looking ahead to Bank of England Governor Andrew Bailey’s speech later today and tomorrow’s Federal Reserve minutes for further direction cues.
April’s Consumer Price Index (CPI) showed that UK inflation had risen by 0.7% year-on-year in April 2021, beating market expectations of a 0.4% increase and providing some much-needed support for Sterling, which has been under pressure since last week due to Brexit-related uncertainty surrounding Northern Ireland trade talks between Britain and the EU bloc.
Meanwhile, investors are also keeping an eye out for news from BoE Governor Andrew Bailey who is set to speak later today at 17:00 GMT about how monetary policy should be used during times of crisis such as this one caused by Covid 19 pandemic. Additionally, traders will be paying close attention tomorrow when Fed releases its latest meeting minutes, which could provide insight into future monetary policy decisions from central bank officials.
Overall, GBP/USD looks poised for further gains if positive developments come out over these two events in terms of economic growth prospects or any other supportive measures taken by policymakers.
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