- GBP/USD drifts lower to around 1.3440 in Friday’s Asian session.
- Traders are pricing two Fed rate cuts this year.
- The BoE cut interest rates from 4.25% to 4.0% on Thursday, as widely expected.
The GBP/USD pair posts modest losses near 1.3440 during the Asian trading hours on Friday. The US Dollar (USD) strengthens against the Pound Sterling (GBP) after Federal Reserve (Fed) Governor Christopher Waller has reportedly emerged as the top contender to succeed embattled Fed Chair Jerome Powell. The Fed’s Alberto Musalem is scheduled to speak later on Friday.
Bloomberg reported on Thursday that Fed Governor Christopher Waller is emerging as a top candidate to be the next Fed Chair. Waller favored a 25 basis point (bps) rate cut last week, while his colleagues voted to hold rates steady. Traders are now pricing in nearly a 93% odds of a rate reduction in September, with at least two rate cuts priced in by the end of the year.
Additionally, US President Donald Trump on Thursday selected Stephen Miran to serve on the Fed Board of Governors, replacing Adriana Kugler following her surprise resignation last week.
The Bank of England (BoE) decided to cut interest rates from 4.25% to 4.0% at its August meeting on Thursday. However, four of its nine policymakers sought to keep borrowing costs steady, suggesting the BoE’s run of rate cuts might be nearing an end.
The UK central bank revealed “a gradual and careful approach” to further cuts on the Bank Rate but added that “the restrictiveness of monetary policy had fallen as the Bank Rate had been reduced. Hawkish rate cuts from the BoE might cap the downside for the major pair in the near term. Investors trimmed their bets on the chance of another BoE rate reduction by the end of 2025 and were only fully pricing in a cut to 3.75% in February next year, according to data from LSEG.
