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GBP/USD strengthened in early trading in Asia on Thursday. Rising house prices in the UK supported bets that the Bank of England is unlikely to cut interest rates anytime soon, sending GBP/USD higher. Bank of England Governor Catherine L. Mann will speak on Thursday. As of press time, GBP/USD was trading at 1.2630, up 0.05% on the day.
Earlier this week, Federal Reserve Chairman Jerome Powell said it was too early to start cutting interest rates in March, and investors continued to be optimistic about the first rate cut in June. Four Fed governors, Adriana Kugler, Boston Fed President Susan Collins, Minneapolis Fed President Neel Kashkari and Richmond Fed President Thomas Barkin, were noncommittal about when the central bank might begin cutting its benchmark lending rate from a two-decade high. Is it possible? However, Minneapolis Fed President Neel Kashkari said the Fed needs more time to gain confidence in the outlook for inflation before starting to cut interest rates.
Britain’s Halifax house price index rose by an annualized 2.5% in January on Wednesday, marking its strongest gain in a year. Sarah Breeden, deputy governor of the Bank of England, said on Wednesday that the Bank of England was in no rush to cut interest rates. Breeden also said that the consideration now is how long interest rates need to remain at current levels, rather than whether further interest rate increases are needed. Money markets put a 61% chance of the Bank of England cutting interest rates in June.
