The GBP/USD pair is on the rise, trading near 1.3180 in the Asian session on Friday. The weakening US Dollar is bolstering the major pair, with investors eyeing the upcoming US Nonfarm Payrolls (NFP) data release later today.
According to the latest report from Automatic Data Processing (ADP), the private sector added 99,000 jobs in August, lower than the previous month’s 111,000. This weaker-than-expected job growth has raised expectations of a potential interest rate cut by the Federal Reserve in its upcoming meeting on September 17-18.
Meanwhile, the Bank of England (BoE) is showing reluctance to rush into rate cuts, providing support to the Pound Sterling (GBP). BoE Governor Andrew Bailey has indicated that while inflation pressures are easing, rate cuts will not be hasty. Investors are pricing in a 25% chance of a rate cut in the September meeting, with full expectations for a cut in November.
Analysis:
The GBP/USD pair is benefiting from the weakening US Dollar and cautious optimism from the Bank of England regarding interest rate cuts. The upcoming US NFP data release will be crucial in shaping market expectations for the Federal Reserve’s policy decisions. A weaker-than-expected job growth could lead to a significant Fed rate cut, further impacting the USD. Investors are closely watching these developments to make informed decisions about their investments in the currency market.