- The Pound Sterling falls sharply against the US Dollar near 1.2850 with a focus on Fed/BoE policy meetings.
- Traders raise BoE rate-cut bets despite stubborn UK service inflation.
- Investors see the Fed delivering a dovish interest rate guidance.
The Pound Sterling (GBP) exhibits a weak performance against its major peers, except the Japanese Yen, on Tuesday. The British currency weakens as market speculation for the Bank of England (BoE) to begin reducing interest rates from the August meeting, which will be announced on Thursday, has improved further. Trades see a little over 58% chance that the BoE will cut its key borrowing rates by 25 basis points (bps) to 5%, Reuters reported.
Investors expect that the BoE’ rate-cut decision will be a tough call, with 5-4 vote split as inflation in the service sector is significantly higher than where it needs to be to boost policymakers’ confidence for rate cuts. United Kingdom’s (UK) annual service inflation remained higher at 5.7% in June than bank’s forecast of 5.1%.
In the last monetary policy meeting, BoE Governor Andrew Bailey said policymakers saw the decision to keep interest rates steady as ‘finely balanced’, which boosted expectations that the central bank will cut interest rates in August.
Meanwhile, fears of price pressures remaining persistent have deepened as UK Finance Minister Rachel Reeves vowed to deliver above-inflation pay rises worth 9.4 billion pounds for workers in the public sector such as doctors and teachers. Reeves told Parliament, “I have today set out our decision to meet the recommendation of the pay review bodies because the previous government failed to prepare for these recommendations in their departmental budgets,” Reuters reported. Reeves announced that she will hold her first fiscal budget on October 30.
Daily digest market movers: Pound Sterling weakens against US Dollar after upbeat US JOLTS Job Openings data
- The Pound Sterling drops to near 1.2835 against the US Dollar (USD) in Tuesday’s American session. The US Dollar rises on upbeat United States (US) JOLTS Job Openings data for June. The report showed that fresh job vacancies were higher at 8.18 million than expectations of 8.04 million and the former release of 8.23 million, downwardly revised from 8.14 million.
- The GBP/USD pair remains inside Monday’s trading range but is on the backfoot with a focus on interest-rate decisions by the Federal Reserve (Fed) and the BoE on Wednesday and Thursday, respectively.
- The Fed is widely anticipated to maintain the status quo for the eighth consecutive meeting. Therefore, investors will keenly focus on the monetary policy statement and Fed Chair Jerome Powell’s press conference to get fresh cues about rate cut prospects.
- Market experts see the Fed sending a clear message that rate cuts are highly likely in the September meeting amid significant progress in inflation declining towards the bank’s target of 2% and increasing risks to labor market strength. The scenario would be unfavorable for the US Dollar and bond yields. At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major peers, advances to 104.80. 10-year US Treasury yields recovers to near 4.18%.
- This week, many economic data are lined up for release, which will impact the next move in the US Dollar, such as ADP Employment Change, ISM Manufacturing PMI, and Nonfarm Payrolls (NFP) for July.
Pound Sterling Price Today:
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Japanese Yen.
| GBP | EUR | USD | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| GBP | -0.16% | -0.20% | 0.42% | -0.17% | 0.02% | -0.34% | -0.18% | |
| EUR | 0.16% | -0.06% | 0.55% | -0.00% | 0.16% | -0.19% | -0.02% | |
| USD | 0.20% | 0.06% | 0.60% | 0.03% | 0.22% | -0.14% | 0.03% | |
| JPY | -0.42% | -0.55% | -0.60% | -0.58% | -0.40% | -0.76% | -0.57% | |
| CAD | 0.17% | 0.00% | -0.03% | 0.58% | 0.18% | -0.18% | -0.02% | |
| AUD | -0.02% | -0.16% | -0.22% | 0.40% | -0.18% | -0.37% | -0.22% | |
| NZD | 0.34% | 0.19% | 0.14% | 0.76% | 0.18% | 0.37% | 0.17% | |
| CHF | 0.18% | 0.02% | -0.03% | 0.57% | 0.02% | 0.22% | -0.17% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Technical Analysis: Pound Sterling declines toward 1.2800
The Pound Sterling is going through a mean-reversion move toward the lower boundary of the Rising Channel chart pattern on a daily timeframe. The GBP/USD pair fell on the back foot after breaking below the crucial support of 1.2900. The Cable drops below the 20-day Exponential Moving Average (EMA) near 1.2860, suggesting uncertainty in the near-term trend.
The 14-day Relative Strength Index (RSI) declines toward 40.00, which would a be cushion for the momentum oscillator.
On the downside, the round-level of 1.2800 will be a crucial support zone for the Pound Sterling bulls. Meanwhile, the two-year high near 1.3140 will be a key resistance zone for the Cable.
