Fed Chairman Jerome Powell said the central bank would hold off on any further cuts as the bank feels “that policy is well-positioned”. However, he added that he expected the economy to continue expanding at a moderate pace, supported by “solid household spending and supportive financial conditions”. However, data on Thursday revealed that while US consumer spending edged up last month, wages were left unchanged which could cast doubts on whether or not the American consumer will continue to be the driving force behind the economy.
Added to this, inflation was subdued in September, as the personal consumption expenditure (PCE) price index was left unchanged for the second consecutive month.
As the PCE index is the Federal Reserve’s preferred measure of inflation it likely weighed on the dollar, as it rose to 1.3 per cent in September, below the bank’s 2 percent target for 2019.
Meanwhile, the pound edged up despite data revealing that Brexit pessimism caused the UK’s longest-running measure of consumer confidence to fall to its joint lowest since 2013.
While British consumers have remained relatively upbeat since the 2016 Brexit referendum, data from recent weeks have revealed morale has softened.
However, Sterling received an upswing of support as lawmakers approved Boris Johnson’s calls for an early general election.
Markets hope that the first December election in nearly a century will break the current Brexit impasse in parliament.
Meanwhile, looking ahead to the end of the week, the dollar could extend its losses following the release of the US non-farm payrolls data if it falls short of forecasts.