• The GBP/USD begins the week positively, gaining 0.23%.
• BoE Mann commented that 0.50% moves reduce the risks of domestic inflation.
• Fed’s Waller and Bostics supported 75 bps in July and both reiterated the Fed’s commitment to tame inflation.

The British pound is trimming some of Friday’s losses, though edges lower after printing a daily high at around 1.2279, but remains to gain some 0.12% amidst a thin liquidity session due to a US bank holiday. The GBP/USD is trading at 1.2252 at the time of writing.

A weak US dollar boosts the pound

The sentiment is positive, as shown by Europen equities and US futures markets. On Monday, the GBP/USD opened near the 1.2210s area and, albeit reaching a daily low around 1.2200, bounced off and edged slightly above the daily pivot point amid the lack of UK – US economic data. In the meantime, the US Dollar Index, a gauge of the buck’s value vs. a basket of rivals, is losing 0.29% and is currently at 104.351, a tailwind for the GBP/USD.

BoE and Fed officials cross wires

Nevertheless, once both central banks – the Fed and the BoE – had their monetary policy meetings, speakers from both banks began to cross wires.

Firstly, one of the dissenters on BoE’s Thursday decision Catherine Mann said that 50 bps moves reduce the risks of domestic inflation, boosted by a weaker pound. Mann said that the BoE should raise rates faster because the weakness in the pound’s value is adding to inflationary pressures. Mann added that inflation is becoming more embedded and persistent.

On the US side, Fed Governor Christopher Waller said he would support a 75 bps hike in July if data come in as he expects, reiterating that the central bank is all in on re-establishing price stability. Similarly, Atlanta’s Fed President Raphael Bostic said he supported the 0.75% increase last week and said the Fed needs to act decisively and affirmatively to get inflation under control.

Elsewhere, Cleveland Fed President Loretta Mester said that it would take “a couple” of years to get inflation back to 2%.

In the week ahead, the UK economic docket will feature BoE Chief Economist Huw Pill and CBI Industrial Trend Orders for June. Across the pond, May’s Existing Home Sales, alongside Fed speaker Thomas Barking would entertain GBP/USD traders.

Key Technical Levels