Pound sterling rises in relation to the US dollar as more people wager that the Fed will lower interest rates by 25 basis points on December 18.
The Bank of England (BoE) anticipated to be among those central banks that will follow a more gradual policy-easing cycle amid concerns over price pressures remaining persistent, which is why the pound sterling (GBP) is trading broadly firm against its major peers at the beginning of the week, with the exception of Asia-Pacific currencies.
Monetary Policy of the BoE “I suspect we’ll hit our inflation target by the end of our forecast period which is three years,” Megan Greene, an external member of the MPC, stated on Thursday. Additionally, BoE Governor Andrew Bailey stated on Wednesday that the central bank still needs to do some work to lower inflation below its 2% target. He was nevertheless certain that the disinflation process was firmly established.
When the BoE Deputy Governor Dave Ramsden speaks at an event hosted by the Official Monetary and Financial Institutions Forum at 13:00 GMT on Monday, investors will be closely watching. Among the policymakers who have remained inclined to lower interest rates is Dave Ramsden.
Labor demand impacted by the UK employers’ increased National Insurance contributions in Labour’s first budget, according to survey data.
Regarding the economy, a recent Recruitment and Employment Confederation survey (REC) trade association and accounting firm KPMG has indicated a drop in the need for workers following the publication of the first budget for UK Labour, which increased the Employer’s National Insurance Contribution (NIC) to 15%. According to the agency, their index of staff demand dropped from 46.1 in October to 43.9, the lowest level since August 2020.
Daily Market Update: Pound sterling beats the US dollar Because of dovish Fed bets.
In Monday’s London session, the value of the pound sterling rises to around 1.2770 in relation to the US dollar (USD). As market participants grow more certain that the Federal Reserve (Fed) will lower interest rates during its monetary policy meeting on December 18, the GBP/USD pair rises.
The likelihood that the Fed will lower According to the CME FedWatch tool, it will raise its key borrowing rates by 25 basis points (bps) to 4.25% to 4.50% next week, from 62% one week ago. With the US Dollar Index (DXY), which measures the value of the US dollar relative to six major currencies, rising to almost 106.20, the US dollar appears to be largely unconcerned by growing Fed rate cut bets.
Nonfarm Payrolls (NFP) data for November, market expectations that the Fed would lower interest rates next week intensified.
Following Friday’s release of the US Nonfarm Payrolls (NFP) data for November, market expectations that the Fed would lower interest rates next week intensified. According to the report, the economy added 227K new workers, which was more than the 200K predicted. As anticipated, the unemployment rate increased from 4.1% to 4.2%. On a monthly and annual basis, average hourly earnings increased steadily by 0.4% and 4%, respectively. faster than anticipated, respectively.
Federal Reserve (Fed) Governor Michelle Bowman defied market expectations on Friday by stating that she would rather “lower the policy rate cautiously and gradually as inflation remains elevated.”
Investors are looking forward to Wednesday’s release of the US Consumer Price Index (CPI) data for November, which will provide additional indicators regarding the state of inflation. It anticipated that headline CPI inflation will have increased from the previous release of 2.6% to 2.7%. A steady 3.3% increase anticipated in the core CPI, which does not include the volatile prices of food and energy.
