26 August 2024, GBP/USD
GBPUSD:
The GBP/USD pair is trading on a stronger note around 1.3210 during the early Asian session on Monday. The signal that the US Federal Reserve (Fed) will start easing monetary policy in September is depressing the dollar and providing support to the GBP/USD pair. Market participants are waiting for the US Durable Goods Orders data for July to be released later on Monday.
On Friday, at a conference in Jackson Hole, Fed Chairman Jerome Powell made it clear that the FOMC will cut the target range for the federal funds rate at its next meeting on September 17-18 as inflation is on a steady path back to the 2% target. However, Powell was reluctant to hint at the size of the rate cut in September and the pace of rate cuts this year as the Fed remains data dependent.
Firmer bets for a Fed rate cut continue to undermine the US Dollar and create a tailwind for GBP/USD. Analysts at Rabobank noted that they expect labor market conditions to deteriorate further for the remainder of the year, triggering four consecutive rate cuts of 25 basis points (bps) each at the September, November, December and January meetings.
On the other hand, speculation that the Bank of England's (BoE) policy easing cycle will be slower than that of other major central banks is providing some support for the Pound Sterling (GBP). Bank of England Governor Andrew Bailey said late Friday that inflation remains the main concern for the UK central bank, although many price pressures have eased faster than expected. Bailey noted that it is premature to declare victory over inflation.
Trading recommendation: Trade predominantly with Buy orders from the current price level
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