The GBP/USD pair extended its losing streak for the third consecutive day, trading around 1.3060 during Tuesday’s Asian session. The continued decline can be attributed to a strengthening US dollar (USD), which has gained traction following recent US labor data that cast doubt on the possibility of an aggressive interest rate cut by the Federal Reserve (Fed) in September.
Market expectations, as indicated by the CME FedWatch Tool, anticipate a minimum 25 basis point (bps) rate cut by the Fed this month. However, the probability of a more substantial 50 bps cut has slightly decreased to 29.0%, down from 30.0% a week prior.
Comments from Federal Reserve Bank of Chicago President Austan Goolsbee on Friday indicated that Fed officials are aligning with the broader market sentiment, suggesting an imminent policy rate adjustment, as reported by CNBC.
In the UK, investors are keenly awaiting the release of employment data for the quarter ending in July, scheduled for Tuesday. This report is expected to have a significant impact on market expectations regarding the Bank of England’s (BoE) interest rate decisions for the remainder of the year.
Forecasts suggest that the ILO Unemployment Rate may decrease to 4.1% from 4.2%, while Average Earnings, including bonuses, are projected to slow to 4.1% from the previous 4.5%. A slowdown in wage growth could bolster expectations for further interest rate cuts by the BoE, potentially signaling a reduction in inflationary pressures within the services sector.
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