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The Sterling continued to weaken versus the US dollar ahead of the Fed’s interest rate decision. US inflation continues to impact the pair as the Employment Cost Index drops.
The International Monetary Fund expects the UK economy to hit a recession in 2023. The Sterling has extended its losses for three days in a row against the dollar.
The remarkable development came following a report by the US Commerce Department showing that inflation continued to ease, incrementing expectations that Fed’s rate hikes would moderate. At the time of writing, the GBP/USD is trading at 1.2302 versus the previous closing 1.23509. US data slightly weakened the US dollar, though it remains stronger than the GBP. Wall Street advances after employment costs data cooled down.
The US Department of Labour revealed that the Employment Cost Index used by Fed officials as a measure of inflation in the labour market eased from 1.2% to 1% QoQ. Today’s data added to last week’s US Core PCE, another inflation indicator used by the Fed, edged lower by the fourth straight month, from 4.7% YoY to 4.4%.
