The Pound Sterling (GBP) has seen a significant rise above 1.3150 against the US Dollar (USD) in Thursday’s London session. This surge comes as lower job vacancies in the United States (US) for July have boosted expectations of a large interest-rate cut by the Federal Reserve (Fed). The weak US job vacancy data has raised concerns about labor market conditions, prompting investors to anticipate the Fed’s aggressive policy-easing measures.
The latest Job Openings data revealed that fresh job vacancies in the US stood at 7.67 million, the lowest in over three-and-a-half years. This has led to a surge in expectations for the Fed to reduce interest rates by 50 basis points (bps) to 4.75%-5.00% in the upcoming September meeting. The US Dollar Index (DXY) has fallen near the crucial support level of 101.00 as a result.
Looking ahead, the upcoming US Nonfarm Payrolls (NFP) data for August will be a key factor influencing the US Dollar’s performance. The Fed’s focus on preventing job losses and managing inflationary pressures will be crucial in determining the future of interest rates.
Market Analysis: Pound Sterling Outperforms Major Peers
The Pound Sterling has shown strength against its major peers, driven by the upbeat economic outlook in the United Kingdom (UK). Market expectations of a shallower policy-easing cycle by the Bank of England (BoE) have further supported the British currency. The final estimate of S&P Global/CIPS PMI data for August indicated a faster pace of economic activity in the UK, particularly in the manufacturing and services sectors.
Financial market participants anticipate a single interest rate cut by the BoE in the remainder of the year, with expectations of policy normalization. The central bank is likely to maintain interest rates at 5% in the current month, with potential cuts in November or December.
Investors will closely monitor market sentiment and speculation regarding BoE interest rate decisions, as upcoming economic data releases could impact the Pound Sterling’s performance. Key data to watch for include Employment data for the quarter ending July and monthly Gross Domestic Product (GDP) data for July.
Technical Analysis: Pound Sterling Rebounds from Weekly Low
The Pound Sterling has bounced back from a weekly low of around 1.3090 against the US Dollar, reaching near 1.3150. Strong buying interest near the upward-sloping trendline and bullish indicators suggest a positive trend for the GBP/USD pair. The 14-day Relative Strength Index (RSI) indicates a resumption in bullish momentum, with key resistance levels at 1.3500 and 1.3640.
Pound Sterling FAQs
For those interested in Pound Sterling (GBP) trading, understanding the factors influencing its value is crucial. The BoE’s monetary policy decisions, economic indicators, and trade balance data all play a significant role in shaping the currency’s performance. Stay informed about key economic data releases and central bank policies to make informed trading decisions.