Ella 
During the London session on Friday, the pound (GBP) continued to rise against the US dollar (USD) to around 1.3150. The US dollar (USD) fell sharply and GBP/USD rose as US Producer Price Index (PPI) data for August fueled expectations that the Federal Reserve (Fed) will begin aggressive interest rate cuts next week.
The U.S. Dollar Index (DXY), which tracks the greenback’s value against six major currencies, slipped further to near 101.00.
The PPI report showed producer inflation rose at an annual rate of 1.7%, below expectations of 1.8% and July’s 2.1%. Over the same period, the core producer price index, which excludes volatile food and energy prices, rose a steady 2.4%. Investors expect core PPI growth to accelerate to 2.5%. Meanwhile, monthly headline and core PPI grew at 0.2% and 0.3% respectively.
According to the CME FedWatch tool, the probability that the Federal Reserve will cut interest rates by 50 basis points to 4.75%-5.00% in September has risen sharply to 43% from 14% before the release of U.S. PPI data.
During Friday’s trading session, investors will focus on preliminary data on Michigan’s consumer confidence index for September. It is estimated that the consumer confidence index will basically stabilize at 68.0 from the previously announced 67.9.
