The GBP/USD pair remains stable near 1.3110 in the early European session on Wednesday as investors await key US economic data releases and Federal Reserve (Fed) rate cut expectations. The risk-off sentiment in the market could strengthen the US Dollar (USD) and potentially push the major pair lower. Later today, the US JOLTS Job Openings and Fed Beige Book reports are scheduled to be released.
Yesterday’s data from the Institute for Supply Management (ISM) showed that the US Manufacturing PMI in August was weaker than expected, coming in at 47.2 compared to the market consensus of 47.5. This could impact the USD’s performance in the near future.
According to the CME FedWatch tool, there is a 61% chance of the Fed cutting rates by 25 basis points at the September meeting, with a 39% chance of a 50 bps cut. Fed Chair Jerome Powell’s recent comments suggest that the central bank is likely to ease monetary policy, which could put pressure on the USD.
Looking ahead, the US August employment data, especially the Unemployment Rate, will be closely watched on Friday. A rise in the Unemployment Rate could strengthen market expectations for a larger rate cut by the Fed.
Meanwhile, the Bank of England (BoE) is expected to maintain its interest rates unchanged in September, following a more cautious approach compared to other central banks. GBP/USD will be influenced by USD dynamics as there are no major economic releases from the UK.
Analysis:
The stability of the GBP/USD pair around 1.3110 reflects the cautious sentiment in the market as investors await key economic data and central bank decisions. The weaker-than-expected US Manufacturing PMI and expectations of a Fed rate cut are key factors driving the market sentiment. Traders should closely monitor upcoming US economic data releases and Fed announcements for potential trading opportunities in the GBP/USD pair.