06 September 2024, GBP/USD
An event to look out for today:
15:30 GMT+3. USD - Unemployment Rate
GBPUSD:
The GBP/USD pair traded in positive territory for the third consecutive day around 1.3185 on Friday during Asian trading hours. Sustained weakness in the US dollar (USD) provides some support to the major pair. Market participants will be keeping a close eye on the US Non-Farm Payrolls data for August (NFP) due out later on Friday.
On Thursday, Automatic Data Processing (ADP) reported that private sector employment grew at the weakest pace in three and a half years in August. The US private sector added 99,000 new jobs in August, down from a downwardly revised 111,000 in July and below the forecast of 145,000.
Markets expect the Federal Reserve (Fed) to cut interest rates at its 17-18 September meeting. Later in the day, the Bureau of Labour Statistics will release the much-anticipated non-farm payrolls report, which is expected to show that the US economy added 160,000 jobs in August. This report has been a key event in shaping market expectations for the Fed Funds rate. A weaker than expected result could trigger a significant Fed rate cut and further undermine the dollar.
On the other hand, modest expectations of an interest rate cut by the Bank of England (BoE) are boosting the Pound Sterling (GBP). Last month, Bank of England Governor Andrew Bailey said that he believes long-term inflationary pressures are easing, but that there is no rush to cut rates further as it is too early to declare victory over inflation. Investors believe that the probability that the Bank of England will cut interest rates at the meeting on 12 September is about 25%, but the probability of a rate cut is fully embedded in the November price.
Trading recommendation: Trade predominantly with Buy orders from the current price level
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