Pound strengthens against the US dollar on Fed rate-cutting expectations.

In Wednesday’s London session, the pound sterling (GBP) held gains above the psychological support level of 1.3000 against the US dollar (USD). On Tuesday, the GBPUSD pair reached new year-to-date highs at 1.3050 amidst widespread US dollar weakening.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, finds brief support after falling to approximately 101.30, its lowest level in more than seven months.

Investors remain divided on the extent of the Fed rate decrease in September.

Market participants appear to be overwhelmingly pessimistic on the The greenback rose despite widespread speculation that the Federal Reserve (Fed) will begin lowering interest rates in September. Investors appear to be convinced that the Fed will shift to policy normalization next month, but they disagree on the amount of its first interest rate decrease following years of policy tightening.
Investors looking for new clues about the interest rate path in the Federal Open Market Committee (FOMC) minutes for the July meeting. Which will be release at 18:00 GMT. In its monetary policy decision. The Fed maintained its benchmark borrowing rates in the range of 5.25%-5.50%. While warning that the economic outlook is unclear and that the Committee is concerned about the risks to both sides of its dual mission (inflation and employment).
Meanwhile, the primary source for Investors will get indications about the rate-cut path from Fed Chair Jerome Powell’s remarks at the Jackson Hole (JH) Symposium, which runs from Thursday to Saturday. Fed Powell is less likely to outline a predetermined plan of action, but he will confirm that the central bank is willing to change its monetary policy stance if risks arise that could delay the achievement of the bank’s aims.

Daily Market movers: Pound Sterling will be led by BoE Bailey’s speech in Jackson Hole.

The pound sterling performs middling against its key counterparts on Wednesday, with investors looking ahead to Bank of England (BoE) Governor Andrew Bailey’s speech at the JH Symposium on Friday. Andrea Bailey is likely to provide clues as to whether the BoE will lower interest rates again in September.
Market expectations for BoE interest rate reduction in September have risen after July’s United Kingdom (UK) Consumer Price Index (CPI) report revealed that core inflation, which excludes volatile items, fell at a faster-than-expected rate to 3.3%, compared to 3.4% projections. Also, UK service inflation, the most highly watched inflation metric by BoE officials, decreased substantially to 5.2% as pay pressures eased.

Wage growth in the UK fell further in the three months ended in July.

Meanwhile, human resources data company Brightmine stated that pay awards in the three months to July were 4.5% lower than the previous release of 5%. “Employers who have granted compensation award so far this year have already responded to the declining inflation situation by putting Sheila Attwood, senior content manager at Brightmine, told Reuters. That lesser pay awards were in place this year compared to last year.
On the economic front, investors will be looking for the UK preliminary S&P Global Purchasing Managers’ Index (PMI) data for August. Which will be release on Thursday. Economists believe that the flash Manufacturing PMI remained stable at 52.1, while service sector activity increased to 52.8 from 52.5 in the previous release.