30 September 2024, GBP/USD
GBPUSD:
The GBP/USD currency pair is trading at around 1.3385 in the early Asian session on Monday. The prospect of further interest rate cuts by the Federal Reserve (Fed) and a less dovish stance from the Bank of England (BoE) is providing some support to the major pair. The Federal Reserve's Chair, Michelle Bowman, is scheduled to deliver a speech later today.
US inflation has reached a rate close to the Fed's 2% target. The US Bureau of Economic Analysis (BEA) reported on Friday that the headline personal consumption expenditure (PCE) price index rose 2.2% year-on-year in August, up from 2.5% in July. The figure was below the estimated 2.3% level. The core PCE index increased by 2.7% in August, in line with expectations.
On a monthly basis, the PCE price index showed a 0.1% increase over the same period. The CME FedWatch Tool data indicates that the probability of a half-point rate cut in November is nearly 54%, while the probability of a quarter-point cut is 46%.
The appreciation of the pound sterling (GBP) is supported by the expectation that the Bank of England's rate cut cycle will be slower than in the US. This, in turn, serves as a positive factor for GBP/USD. In the absence of significant economic data releases in the UK this week, market expectations regarding the Bank of England's monetary policy actions for the remainder of the year will influence the GBP.
Trading recommendation: Trading predominantly Buy orders from the current price level.
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