Noor Trends News, Technical Analysis, Educational Tools and Recommendations
The British pound took a hit against the US dollar on Wednesday, as escalating political turmoil at the Federal Reserve overshadowed robust inflation data from the UK.
Traders, prioritizing caution amid the uncertainty, drove GBP/USD lower during the North American trading session, with the pair settling at 1.3469—a decline of 0.15%. Despite hotter-than-expected UK consumer prices, the focus shifted to allegations of mortgage fraud against Fed Governor Lisa Cook, prompting speculation about her potential ouster and injecting volatility into currency markets.
The drama unfolded with breaking reports accusing Cook of falsifying bank documents and property records to secure better loan terms, actions that could amount to criminal mortgage fraud. FHFA Director Bill Pulte leveled these claims, as detailed by Bloomberg, intensifying scrutiny on the Fed board member. In response, sources from The Wall Street Journal indicated that President Donald Trump, now back in the spotlight, has confided to aides about contemplating her dismissal. This White House pressure has amplified policy uncertainty, leading investors to flock to safer assets and sell off riskier positions like GBP/USD, which briefly challenged the 1.3500 level earlier in the day on UK economic releases.
Meanwhile, across the Atlantic, UK inflation figures painted a picture of persistent price pressures, complicating the Bank of England’s monetary path. The Office for National Statistics reported that the Consumer Price Index (CPI) climbed 3.8% year-over-year in July, up from 3.6% the previous month. Core CPI matched this 3.8% rise, while services CPI surged to 5%, signaling stubborn inflationary trends in key sectors. This data arrives just after the BoE’s recent decision to trim interest rates to 4% in a narrowly divided 5-4 vote, with officials projecting inflation to ease to 3.6% by the end of 2025, 2.5% in 2026, and back to the 2% target by mid-2027.
The stronger inflation readout has tempered expectations for aggressive rate cuts from the BoE, with market bets on a December reduction slipping from 50% to 42%. Yet, the pound’s weakness underscores how Fed-related headlines are dominating sentiment, eroding confidence in sterling despite the domestic economic resilience.
Looking ahead, attention turns to the US, where the Federal Reserve’s latest meeting minutes are set for release, followed by key jobs data on Thursday and Chair Jerome Powell’s highly anticipated address at the Jackson Hole symposium. These events could either exacerbate or alleviate the current market jitters, potentially reshaping the trajectory for GBP/USD in the coming sessions.
