Pound sterling trades in a tight range as investors await preliminary UK PMI data for October.
The Pound Sterling (GBP) is trading sideways against its major counterparts in Thursday’s London session. As investors await the preliminary United Kingdom (UK) S&P Global/CIPS Purchasing Managers Index (PMI) data for October. Which will be release at 08:30 GMT.
The PMI survey expected to reveal that overall company activity increased at a moderate rate. Manufacturing activity is expected to have increased, albeit at a slower rate, to 51.4 from 51.5 in September. During the same period, the Service PMI predicted to rise to 52.2, slightly lower than the previous publication of 52.4. Signs of ongoing economic growth will imply a strong economic outlook.
Investors are anticipating BoE Mann and Bailey’s speech for new interest rate guidance.
The Pound Sterling’s future is predicted to continue turbulent, as Bank of England (BoE) Governor Andrew Bailey expressed confidence that inflation would slow faster than anticipated. “Disinflation is happening faster than we expected, but we still have genuine questions about whether there have been some structural changes in the economy,” Bailey said at the Institute of International Finance event, according to Bloomberg.
Bailey’s words prompted the Bank of England’s dovish bets. According to market speculation, traders predict the BoE to reduce interest rates in November and are quite confident of replicating the move in December.
Catherine Mann, a member of the Bank of England’s Monetary Policy Committee (MPC), will talk today at 13:00 GMT. Mann, an ardent hawk, was one of four MPC members who voted to keep interest rates constant in August, the only time the BoE reduced its key borrowing rates this year. Governor Bailey will deliver the Mike Gill Memorial Lecture at the US Commodity Futures Trading Commission (CFTC) at 19:45 GMT today.
Daily Market movers: Pound Sterling remains on the backfoot against the US Dollar
In European trading hours on Thursday, the pound sterling was trading near 1.2950 against the US dollar (USD), a new two-month low. The GBPUSD pair is on the backfoot as the USD clings to gains despite a minor drop in market expectations that the Federal Reserve (Fed) will lower interest rates at each of the remaining policy meetings this year. The US Dollar Index (DXY), which measures the value of the US dollar against six major currencies, maintains rises near a new 12-week high of over 104.50.
According to the CME FedWatch tool, the central bank’s likelihood of cutting interest rates by 50 basis points to 4.25%-4.50% by the end of the year has slipped to 68.3% from 71.7% a week earlier. The tool indicates that traders have priced in a 25-bps interest rate drop in November but are unsure about a similar move in December.
The uncertainty surrounding the US presidential elections continues to weigh on riskier assets.
The outcome of the United States (US) presidential election is becoming increasingly doubtful.
In less than two weeks, the US Dollar has increased its appeal as a safe haven. According to the most recent national surveys, former President Donald Trump and current Vice President Kamala Harris are competing fiercely.
In Thursday’s New York session, investors will focus on the preliminary S&P Global PMI data for October, which will be release at 13:45 GMT. The Manufacturing and Services PMIs expected to decrease and expand, but at a slower pace.
