GBP/USD softens to near 1.3490

British Pound drifts lower below 1.3500 as Fed hike bets rise, UK jobs data loom

The GBP/USD pair loses momentum to around 1.3490 during Asian trading hours on Tuesday. Expectations of a US Federal Reserve (Fed) interest rate hike on Wednesday provide some support to the US Dollar (USD) against the British Pound (GBP). The UK jobs report is due on Tuesday. Attention will shift to the Bank of England (BoE) interest rate decision on Thursday.

After the US inflation report on Friday, which showed core Consumer Price Index (CPI) rose by a higher-than-expected 0.3% in August, traders are more convinced the Fed will raise interest rates to address sticky inflation. Traders are now pricing in about a 92.4% chance of ‌a rate hike at the central bank’s September policy meeting, ‌up from about 67% before the CPI data last week, according to the CME FedWatch Tool. Read more…

The Pound tests an August low on the Fed’s hike odds

GBP/USD closed just beneath 1.3500 on Monday, 0.19% lower, after trading to its lowest since August 14 in the London morning and buying back half of the drop by the close. The Dollar rose against every major currency on the day as futures priced Wednesday’s Fed increase at 100% and the 10-year Treasury yield touched 5% for the first time since 2023. The Pound gave up less than the Euro did. The nine members of the Bank of England’s rate committee vote on Wednesday and publish on Thursday at 11:00 GMT. They will decide before the Fed announces and tell the market after it has.

The labour market report at 06:00 GMT on Tuesday is forecast to show unemployment at 5% in the three months to July, up from 4.9%. The claimant count is forecast to rise 8.3K in August after an 11K fall, and pay growth including bonuses to slow to 3.9% from 4.1%. The inflation report at 06:00 GMT on Wednesday is forecast at 3.1% for August, up from 2.9%, with the core rate at 2.7% and the retail price index at 3.5%. One report says the economy is cooling and the other says prices are not. Read more…

British Pound buckles as US yields rise puts Fed in command

The British Pound (GBP/USD) tested five-week lows of 1.3464 and trimmed some of its earlier losses on Monday, but it remains in the red, down 0.23% amid a light economic docket in the US and the UK as both countries’ central banks get ready to release their monetary policy decisions on Wednesday and Thursday, respectively. At the time of writing, GBP/USD trades at 1.3492.

Investors’ mood is neutral after beginning the week on the back foot, as Oil prices surged, driven by Houthi attacks on Saudi Arabia that damaged the East-West pipeline, which bypassed the closure of the Strait of Hormuz by routing through the Red Sea. Read more…