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Title: GBP/USD crosses monthly resistance to touch 1.1600 as UK stimulus hopes join risk-on mood

September 9, 2022 12:49 AM ET

By: AnalysisWatch

The GBP/USD pair hit an intraday high near 1.1600 before the London Stock Exchange opened on Friday, as a risk-off mood weighed on the U.S. dollar. Buyers of the cable pair are also holding out hope thanks to recent positive sentiment in the U.K. after new Prime Minister Liz Truss delivered on her campaign promises.

In addition, Fed Chairman Jerome Powell said on Thursday that there is a need for frank and firm action on inflation, as reported by Reuters. "We believe that through our policy actions we will be able to put growth below trend and bring the labor market back into better balance," added the Fed's Powell.

Similarly, Chicago Fed President Charles Evans advocated for a 0.75 percent rate hike in September. The European Central Bank (ECB), which announced a 0.75 percent rate hike, was also upbeat, and its president, Christine Lagarde, expressed a willingness to take additional such measures to keep inflation under control.

In other news, British Prime Minister (PM) Truss announced on Thursday that the government would implement a two-year "energy price guarantee," stating that a typical household would pay no more than 2,500 pounds per year on energy bills."The Treasury is announcing a joint program with the Bank of England to address the extraordinary liquidity needs of energy companies, to the tune of £40 billion," Truss added. On a page dedicated to Brexit, British Prime Minister Truss also mentioned, according to the UK Express, that she wanted a "negotiated solution" to the dispute, warning that she had to "deliver all the things" that the UK had previously demanded.

Against this backdrop, U.S. 10-year Treasury yields remain off the mark, near 3.32%, after a positive day, while the S&P 500 Futures are tracking Wall Street's gains around 4,010.

Looking ahead, UK consumer inflation expectations for August, previously at 4.6%, will entertain traders on a light calendar. Nonetheless, the Fed's last round of policy talk before the blackout period begins this weekend will be crucial for GBP/USD traders to watch.

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