GBP/USD HITS MULTI-YEAR HIGH POST POWELL DOVISH PIVOT ABOVE 1.3200

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  • GBP/USD jumps over 1% after Powell signals potential rate cuts, reaching its highest level in two years.
  • Powell’s Jackson Hole speech emphasizes data-dependent rate adjustments, with confidence in inflation returning to 2%.
  • US Dollar Index (DXY) drops 0.80% to 100.71, while the US 10-year Treasury yield falls to 3.81%, reflecting market expectations for a September rate cut.

The GBP/USD climbed sharply during the North American session after Federal Reserve Chair Jerome Powell gave the green light to cutting interest rates, as he’s confident that inflation is edging towards the central bank's 2% goal. The pair traded above 1.3200, at around new two-year highs, gaining over 1%.

GBP/USD hits new two-year highs above 1.3200

At his Jackson Hole speech, Jerome Powell said, “The time has come for policy to adjust,” adding that the size and timing of rate cuts would be data dependent. He said he’s confident that inflation “is on a sustainable path back to 2%,” though he mentioned that risks in employment had tilted to the upside.

Meanwhile, traders of Fed funds futures had priced in a 33% chance of the Fed cutting its interest rates by 50 basis points at the upcoming September meeting.

In response to Powell’s speech, traders dumped the Greenback, which, according to the US Dollar Index (DXY), has fallen 0.80% and exchanged hands at 100.71. At the same time, the US 10-year Treasury note yield dropped four basis points to 3.81%.



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