GBP/USD Receives Breather From Fed Chair’s Comments

The GBP/USD pair has been heavily impacted by the recent events in the FX markets. As the US economy and Federal Reserve guidance continue to drive currency movements, the pound has struggled to keep pace with the strong USD rally of last week. However, recent comments from Fed Chair Jerome Powell have offered some relief for the GBP/USD pair.

Powell’s speech yesterday echoed his message from last week’s rate decision, where he emphasized the need for continued disinflation but hinted at the possibility of further interest rate hikes if the labor market remains strong. The Fed’s tight labor market, as noted by Powell and the Fed’s Kashkari, could lead to higher inflationary pressures, which may result in further interest rate hikes.

On the UK side, the upcoming strike action by civil servants on March 15th remains a concern for the government. The Chancellor of the Exchequer, Jeremy Hunt, is expected to deliver his fiscal plan on the same day and may face pressure to reassess pay settlement issues. The strike action could disrupt the UK economy and raise questions about the UK leadership, which is bearish for the pound.

GBP/USD to Face Renewed Bearish Pressure

Overall, the GBP/USD pair is likely to face further pressure in the coming weeks as the market continues to closely monitor the US economy and Federal Reserve guidance, as well as any potential disruptions from the UK strike action. Despite these challenges, the GBP/USD pair may find some relief in the coming days as Powell and the Fed continue to offer insight into their plans for future rate hikes and inflationary pressures.