Jerome Powell expressed confidence that the American economy is ready to withstand another round of rate hikes by the Federal Reserve. His comments boosted volatility in the currency market. The EUR/USD pair returned to last week's lows near the level of 1.1620. This sell-off has contributed to the difference in policy stances of the central banks. While the Federal Reserve intends to normalize the monetary policy, the ECB on the contrary, is looking for reasons to postpone tapering of the quantitative easing program. Meanwhile, the final estimates from the Eurostat showed that the consumer prices growth accelerated to 2%, reaching the central bank's target level. The Bank of England was the regulator that was expected to take some decisive actions, but the inflation data discouraged investors.
The UK inflation rate remained unchanged while experts predicted a rise. So, we can abandon hopes that the Bank of England will hike the interest rate until the end of the year. This fact put the pound sterling under pressure. As the British currency failed to break the level of 1.30 at the first try, it is likely to consolidate near 1.3025.
Despite the political instability in the United Kingdom, traders remained optimistic regarding the pound sterling, but then they adopted a pragmatic approach. In June, the consumer prices remained at the same level, and the annual inflation rate was left without changes at 2.4%. As a result, the pound sterling fell to 10-month low against the US dollar that is getting stronger. Today, the bias is unlikely to change, as the Fed Chair is scheduled to deliver one more optimistic speech.