Pound sterling fluctuates as investors await new interest rate forecasts.

The Pound Sterling (GBP) is held in a tight range in Monday’s European session. As investors await more information on the Bank of England’s (BoE) interest rates before taking action. The GBPUSD is struggling to find direction as the timing of rate reduction. By the Bank of England and the Federal Reserve (Fed) remains unknown.

High wage growth and service inflation keep the UK’s inflation rate sticky.

Policymakers from the BoE and Fed are reluctant to provide details on the timing of rate decreases. Because they require more information. To confirm that inflation will fall to the 2% objective. Wage growth and service inflation in the United Kingdom continue to be skewed to the upside. Deviating from the pace required for price stability.
During a data-packed week, the US Dollar Index (DXY). Which measures the value of the US Dollar against six rival currencies, fluctuates about 104.00. Investors will be closely watching the core Personal Consumption Expenditure price index (PCE) data for January. Which will provide a useful outlook on interest rates.

Daily Market Movers: Pound Sterling remains quiet and tracks sideways.

The US dollar and the pound sterling are trading in a tight range around 1.2660, as investors await more information on the Bank of England’s interest rate policy.
The market expects early rate cuts. are declining due to increased pay growth.
In testimony before the UK Parliament’s Treasury Committee, BoE Deputy Governor Ben Broadbent stated that the momentum in wage growth is double what is required to bring inflation down to the 2% objective.
Investors are waiting for comments from various BoE policymakers this week.
The BoE has often stated that interest rates should remain constant at 5.25% until they are persuaded that inflation will return to the desired pace on a sustained basis.
Investors will pay close attention to commentary on specific timeframe for rate decreases.
Meanwhile, improved corporate optimism and economic prospects provide respite to BoE policymakers.
This would help the BoE to avoid a “hard landing” in its fight against persistent inflation. The harsh landing suggests a severe contraction in economic activities while keeping prices stable.
While experts anticipate an increase in economic activity, recruitment data provider Adzuna reported that job advertising by British employers fell considerably in January.
According to the organization, employment postings were 15% lower than last year, totaling 867,000 positions.
“January 2024 has proven to be one of the most difficult starts to the year for job hunters in recent years with companies continuing to put hiring plans on ice,” said Andrew Hunter, co-founder and CEO of Adzuna.

Cooling labor market conditions would curb high wage increases.

Cooling labor market conditions would curb high wage increases. Bringing a breath of comfort to BoE policymakers.
Meanwhile, the US Dollar remained sluggish. Despite investors being sure that the Federal Reserve (Fed) will not lower interest rates in the March May monetary policy meetings.
Last Monday, New York Federal Reserve President John Williams stated. That rate cuts are expected later this year. When queried about the sticky January Consumer Price Index (CPI) statistics. Williams responded, “My overall view of the economy basically hasn’t changed based on one month of data.”