GBPUSD moves above 1.1400 with the US Dollar losing ground
- The Pound trims losses and returns above 1.1400.
- Investors, on a wait-and-see stance, awaiting for US elections and CPI results.
- Fed’s Barkin warns that inflation fight may lead to a downturn.
The Pound has bounced up from session lows at the mid-range of the 113.00s on Wednesday’s US trading session, returning above 114.00 amid a broad-based US Dollar pullback. The pair, however, is still 1% lower on the daily chart, after having peaked right above 1.1600 on Tuesday.
The dollar picks up in a cautious market session
The Greenback is picking up on Wednesday, with investors reluctant to place significant bets, awaiting the outcome of the US mid-term elections and the release of US consumer inflation figures on Thursday.
The latest news has shown better-than-expected results for the Democrats as the “red wave” announced by the media has not crystallized. The final results, however, might still take some time, and key issues like the control of Congress and Biden’s next year agenda are still uncertain.
Beyond that US CPI data, due on Thursday, might provide further insight into the size of the Federal Reserve’s next interest rate hike. Any surprise in these readings might boost Dollar volatility.
In a thin macroeconomic calendar on Wednesday, US Oil stockpiles have shown a larger-than-expected increment in the week of November 4. The US Energy Information Administration has reported a 3.92 billion barrel increase, well above the consensus of 1.36 million barrels.
Furthermore, Richmond Fed President, Richard Barkin has warned that the inflation fight “might lead to a downturn” as the central bank’s rate hikes are challenged by artificial elements such as “high consumer savings and lack of labor supply”.