Pound sterling is hovering around 1.2800 against the US dollar, with attention focused on the US NFP report.

In Thursday’s London session, the Pound Sterling (GBP) was trading around a two month high against the US Dollar (USD), slightly below the round-level mark of 1.2800. The GBPUSD pair remains strong. As the US Dollar declines amid increased speculation that the Federal Reserve (Fed) may begin lowering interest rates in September.

USD Index remains supported at 104.00 even as traders increase Fed rate-cut bets.

The US Dollar Index (DXY), which analyzes the Greenback’s value versus six major currencies, falls back to the important support of 104.00.

According to the CME FedWatch tool, 30-day Fed Funds futures pricing data shows a roughly 68% possibility. That interest rates will fall from their present levels in September, up from 50% a week earlier. Investors are also expecting two rate cuts from the Fed this year.

Market anticipation for Fed rate cuts has increased following recent data indicating a downturn in the United States (US) economy due to weak industrial data and softening labor demand. This week, the US JOLTS Job Openings data came in lower than expected for April. And the ADP Employment Change did not meet expectations in May. Furthermore, the US Manufacturing PMI survey for May revealed that factory activity declined for the second consecutive month. And the ahead Demand is vulnerable. This spate of negative economic statistics appears to have negated the positive ISM Services PMI issued on Wednesday, which indicated that the US services sector swung back into expansion in May.

Daily market movers: Pound Sterling gain appears limited as US NFP looms.

The pound sterling trades largely stable near 1.2800 vs the US dollar. As the global rate-reduction cycle accelerates. The Bank of Canada (BoC) announced an interest-rate drop on Wednesday. Becoming the first G7 central bank to do so this cycle. The BoC cut interest rates by 25 basis points (bps), as expected. Also, the European Central Bank (ECB) is largely expected to decrease its deposit facility rate by 25 basis points in Thursday’s late European session. The Bank of England and the Federal Reserve are anticipated to follow suit later this year.
The Fed is expected to begin cutting its benchmark borrowing rates following the September meeting. However, predictions may change dramatically once the US Nonfarm Payrolls (NFP) report for May is released on Friday.
The US NFP is expected to indicate that hiring remained strong in May. With companies adding 185K payrolls, up from the previous release of 175K. The unemployment rate is predicted to continue at 3.9%.

Investors expect the Bank of England to decrease interest rates twice this year.

Investors will also look at Average Hourly Earnings data, which measures wage growth and has proven a major impediment to progress in the disinflation process. Annual average hourly earnings are expected to have gradually increased by 3.9%, while Wages are estimated to have increased by 0.3% month on month, up from 0.2% previously. Higher-than-expected payrolls and wage growth would cause traders to rethink Fed rate cuts, whereas lackluster numbers would do the opposite.
On the opposite side of the Atlantic, the United Kingdom (UK) economic calendar has little to offer this week. However, next week, investors will focus on employment data from February to April, as well as monthly Gross Domestic Product (GDP) statistics for April. These economic data will have a substantial impact on market expectations for Bank of England rate reduction. Investors currently expect the BoE to drop interest rates twice this year and begin the policy-easing cycle at its August meeting.