Pound sterling goes beyond 1.2970 against the US dollar ahead of a series of US economic data releases.
The pound sterling (GBP) outperformed its major counterparts on Monday, with the exception of the euro, ahead of the United Kingdom’s (UK) Autumn Forecast Statement, which will be release on Wednesday. Labour’s first budget is unlikely to include increased spending by the administration because high inflation remains a major challenge for the government. The Chancellor of the Exchequer shall also honour obligations made in their Election manifesto.
The UK budget and market speculation about the BoE’s interest rate path will have an impact on the pound sterling.
According to Sky News, the government will keep its promises and will not raise income taxes or national insurance, but employers’ national insurance projected to rise by up to 2 percentage points. The Labour Party projected to provide a significant boost to house affordability.
Meanwhile, mounting anticipation that the Bank of England (BoE) may decrease interest rates at its two remaining sessions this year may dampen the Pound Sterling’s appeal. Market predictions that the BoE will decrease interest rates by 25 basis points in November and December have been triggered by BoE Governor Andrew Bailey’s dovish comments during meetings on the sidelines of the IMF meeting last week.
“I believe that disinflation is happening faster than we thought, but we have Bailey said there are still serious questions about whether the economy has undergone structural shifts.
Daily Market movers: Pound Sterling increases against the US dollar.
During Monday’s London session, the pound sterling rose to roughly 1.2975 against the US dollar. The Pound pair increases as the US Dollar declines, with investors anticipating a flood of US economic data this week.
On Monday, the US Dollar Index (USD), which measures the value of the US dollar against six major currencies, rose to roughly 104.60, a nearly three-month high.
Investors will be closely watching the US preliminary Q3 GDP and Nonfarm Payrolls (NFP) figures for October, which will show the present state of economic growth and labor demand, respectively.
. The economic data will have a substantial impact on market speculation about the Federal Reserve’s (Fed) interest rate outlook for the remainder of the year.
Fed began its policy-easing cycle with a larger-than-usual interest rate decrease of 50 basis points (bps) in September.
The Fed began its policy-easing cycle with a larger-than-usual interest rate decrease of 50 basis points (bps) in September, as officials were concerned about rising economic risks, with confidence in inflationary pressures continuing on track to meet the bank’s 2% target.
According to the CME FedWatch tool, traders expect the central bank to cut interest rates by 25 basis points (bps) in November and December of this year.
Meanwhile, uncertainty surrounding the US presidential election will continue to support the US dollar. During the week-long International Monetary Fund (IMF) event last week, financial experts eloquently reviewed the conclusion of Elections in the United States and their likely implications. Former President Donald Trump has promised to raise tariffs on all nations, and central bankers are concerned that if he wins the election against current Vice President Kamala Harris, the expenses connected with global supply chains will rise.
