The Dollar has been trading around 1.8550 versus the Pound for the majority of this morning’s session as we build up to the release of the PCE Deflator and the advanced GDP report in the States, which is the Fed’s preferred measure for U.S inflation. It was widely expected that economic growth would slow significantly to around 3.0% in the second quarter from 5.6% previously. The Deflator actually came out at 3.3% while GDP slowed to 2.5% which was under expectations and it looks as though the Fed will now hold interest rates at 5.25% on the 8th August. The Dollar has weakened significantly to trade back above 1.8600 on the release of the figure.
written by Adam Solomon
- The Dollar weakens on speculation that the Fed will tighten monetary policy, fuelling concerns that economic growth slowed into the second quarter
- The Pound weakens against the Dollar as UK Producer Prices decline in June while the Housing market continues to show signs of growth
- UK Inflation moves above the government’s 2% target according to the second estimate for first quarter GDP
- The Dollar may weaken further as economic growth in the U.S may slow to 3.0%
- The Pound declines significantly against the Dollar following the untimely death of MPC member, David Walton