Pound falls dramatically versus the US dollar near 1.2850, with the focus on Fed/BoE policy meetings.

On Tuesday, the Pound Sterling (GBP) underperformed its major rivals, with the exception of the Japanese Yen. The British pound falls as market expectations. That the Bank of England (BoE) will begin lowering interest rates at its August meeting. Which will be reported on Thursday, grow.

Traders increase their bets on the BoE cutting interest rates despite stubbornly high UK service inflation.

According to Reuters, traders expect the Bank of England to drop its key borrowing rates by 25 basis points (bps) to 5%.

Investors expect that the BoE’s rate-cut decision will be a difficult one, with a 5-4 vote split. Because inflation in the service sector is much higher than it should be to improve policymakers’ confidence in rate cuts. Annual service inflation in the United Kingdom (UK) stayed higher at 5.7% in June, compared to the bank’s expectation of 5.1%.

In the most recent monetary policy meeting, BoE Governor Andrew Bailey stated. That policymakers considered the decision to leave interest rates constant as ‘finely balanced,’ raising predictions that the central bank may lower interest rates in August.

Meanwhile, suspicions that price pressures will linger have grown. As UK Finance Minister Rachel Reeves pledged to offer above-inflation pay increases totaling 9.4 billion pounds for public sector workers. Such as doctors and teachers Reeves stated in Parliament: “I have today set out our decision to meet the recommendation of the pay review bodies because the previous government failed to prepare for these recommendations in their departmental budgets,” as reported by Reuters. Reeves has indicated that she would hold her first fiscal budget on October 30.

Daily Market movers: Pound Sterling falls versus the US dollar ahead of Fed policy.

During Tuesday’s American session, the pound sterling fell to around 1.2835 against the US dollar. The GBPUSD pair maintains within Monday’s trading range, but is on the back foot as the Federal Reserve (Fed) and the Bank of England (BoE) make interest-rate announcements on Wednesday and Thursday, respectively.
The Fed is widely expected to maintain the status quo for the eighth consecutive meeting. Therefore, Investors will closely watch the monetary policy statement and Fed Chair Jerome Powell’s press conference for further clues about rate cuts.

Investors anticipate the Fed offering dovish interest rate outlook.

Market experts believe the Fed will give a strong message that rate reduction are extremely likely at the September meeting. Despite significant progress in inflation falling toward the bank’s objective of 2% and rising dangers to labor market strength. The situation would be negative for the US dollar and bond yields. At the time of writing, the US Dollar Index (DXY). Which tracks the Greenback’s value versus six major peers, is trading flat near 104.60. While 10-year US Treasury yields have fallen to around 4.17%.

In Tuesday’s session, investors will look to the United States (US) JOLTS Job Openings data for June. Which will be released at 14:00 GMT. The data is expected to show that new job openings were lower at 8.03 million than the previous release of 8.14 million.
ADP Employment Change, ISM Manufacturing PMI. And Nonfarm Payrolls (NFP) for July are among the economic data scheduled for publication this week, all of which will have an impact on the next move in the US Dollar.