- GBP/USD receives support as the US Fed is expected to cut rates in September.
- Traders await US labor market data to gain further impetus on the Fed’s policy stance.
- The Bank of England adopts caution on rate cuts as UK inflation remains sticky.
GBP/USD inches higher ahead of the United Kingdom’s (UK) Gross Domestic Product for the first quarter, trading around 1.3720 during the Asian hours on Monday. The pair may gain ground as the US Dollar (USD) may further depreciate, as traders expect the Federal Reserve (Fed) to cut rates at the September meeting.
On Friday, data showed that US Personal Spending unexpectedly fell in May, the second decline this year. Meanwhile, US Personal income dropped by 0.4% in May, the largest decrease since September 2021. The week ahead welcomes a slew of key US employment figures, which may further offer fresh impetus on the US Federal Reserve’s (Fed) policy outlook.
The June US payrolls report is expected to show the economy added 110,000 new jobs, down from 135,000 in May – the estimate range is currently between a high of 140,000 and a low of 75,000. Moreover, Unemployment is anticipated to tick higher to 4.3% from 4.2%.
The GBP/USD pair also appreciates as the Pound Sterling (GBP) receives support from the Bank of England’s (BoE) cautious stance on rate cuts, as inflation in the United Kingdom (UK) remains stubborn. Core inflation has remained largely unchanged over the past year, causing concern among BoE officials and complicating rate cut decisions.
Meanwhile, political tensions have escalated in the United Kingdom as Prime Minister Keir Starmer scaled back welfare reform plans to contain rebellion by lawmakers in his governing Labour Party. Over 100 Labor MPs had publicly opposed the plan, which aimed to cut £5 billion annually from the soaring welfare budget.
