05 Agosto 2024, GBP/USD
Event to pay attention to today:
17:00 GMT+3. USD - ISM Services PMI
GBPUSD:
The GBP/USD pair declined to 1.2790 during the Asian session on Monday, reflecting the downward trend in the US dollar (USD). The US dollar is facing challenges due to increased expectations of an interest rate cut by the Federal Reserve (the Fed) in September.
CME's FedWatch tool indicates a 50 basis point increase in the probability of a rate cut on 18 September, rising from 11.5% a week earlier to 74.5%. The change is attributed to disappointing US labour market data and a larger-than-expected contraction in factory activity, as reflected in the ISM manufacturing PMI released on Friday.
The number of people employed in the US non-farm payrolls (NFP) in July increased by 114 thousand compared to the previous month, when it totalled 179 thousand (revised downwards from 206 thousand). The figure was below expectations, with data showing a result of 175 thousand on Friday. Meanwhile, the US unemployment rate reached its highest level since November 2021, standing at 4.3% in July, up from 4.1% in June. Furthermore, the ISM US Manufacturing Purchasing Managers' Index (PMI) reached an eight-month low of 46.8 in July.
The Pound Sterling (GBP) faced challenges following the Bank of England (BoE) decision to cut the interest rate by 25 basis points at its August meeting on Thursday. Additionally, Bank of England Governor Andrew Bailey stated that the minimum wage increase has not had a detrimental impact. He highlighted that the overall inflation trajectory, including potential upside risks, is now closer to the 2% target.
Trading recommendation: Trading predominantly Buy orders from the current price level.
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