Pound Gains And Stays Inside Its Range For A Third Week

Bank of England (BoE) external member Greene said that the UK's Bank Rate of 3.75% isn't holding the economy back much, and that waiting for inflation to spread into wages and prices would mean acting too late. New York Fed President Williams said one more US hike this year is appropriate but he sees no need for another in 2027. GBP/USD didn't move when Greene argued for a UK hike, and it hit a high for Tuesday after Williams said the Fed could be done after one more.

Traders' futures bets put about 90% odds on the Fed's rate, now 3.75%-4.00%, ending 2027 at least half a point higher, which is two hikes where Williams sees one. The Pound rose against the Dollar and barely moved against the Euro, so Tuesday's gain came from a weaker Dollar rather than a stronger Pound.

GBP/USD climbed in steps from just above 1.3200 to the 1.3250 area before Williams spoke, and it made its high just under 1.3260 after his comments. It trades in the middle of the rough 1.3200-1.3300 range it has held since September 24.

On the calendar

US inflation for September is due on Wednesday, forecast at 3.6% for the year after 3.4% in August, with core inflation, the measure without food and energy, forecast at 2.5% from 2.4%. Retail sales follow on Thursday, forecast up 0.3% in September after 1.2%. A faster rise in prices would favour the futures market's view over Williams's.

BoE Chief Economist Pill, one of three members who voted for a September hike, speaks on Wednesday and Thursday. UK Gross Domestic Product (GDP) for August is due on Thursday, forecast to shrink 0.1% after growing 0.4% in July, and both matter for whether the BoE hikes on November 5, which traders price above 80%. BoE Governor Bailey and Fed Chair Warsh both speak on Friday.

On the charts

The week of September 28 topped out just above 1.3300, the week of October 5 just under it and the current week so far just above 1.3250, while every low has been near 1.3200. GBP/USD is below its 50-day Exponential Moving Average (EMA) just above 1.3350 and its 200-day EMA just under 1.3400, and the 50-day crossed under the 200-day in early October.