GBP/USD retraces from two-week tops, hovers around 1.3620

• GBP/USD upward pressure towards 1.3670 fades as the New York session kicks in.
• Overall, US dollar strength across the board capped the move towards 1.3700.
• BoE members expressed concerns about inflation, could probably hike rates sooner than expected.

The GBP/USD approaches last week’s highs around 1.3657, is trading at 1.3633, up 0.10% during the New York session at the time of writing. Market mood is upbeat, as it can be witnessed by European and US stock indices posting gains, except for the German DAX and the Spanian IBEX 35, each losing 0.12% and 0.68%.

The US Dollar Index that measures the greenback’s performance against six peers is up 0.10%, sitting at 94.19, putting a lid on the GBP/USD.

Earlier in the Asian session, the British pound reached a weekly high of around 1.3670. The factors that prompted that upward move are comments made over the weekend by Bank of England (BoE) members. 

According to an interview with the Yorkshire Post on Saturday, Andrew Bailey, the BoE Governor, said he is concerned that prices accelerated above the central bank 2% and warned a potentially “very damaging” period of inflation for British customers. Bailey added, that “We [BoE] have got to, in a sense, prevent the thing [inflation] becoming permanently embedded…”.

Furthermore, in the same tone Michael Saunders, a Monetary Policy Committee (MPC) member added, that markets are right to price in an earlier interest rate hike than previously expected as inflation accelerates.

Meanwhile, across the pond, Goldman Sachs cut the forecast for US growth for this year and 2022, blaming the delay to consumer spending. The bank said that they now expect growth of 5.6% on a yearly basis, against a 5.7% foreseen and 4% in 2022, versus 4.4%.

On the macroeconomic front, the UK economic docket is awaiting the NIESR GDP (3M) for September, which is expected to rise by 3.2%. On the other hand, the US is in observation of Columbus Day.

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