Pound sterling rises versus the US dollar as the Fed is expected to begin cutting interest rates in September.

The Pound Sterling (GBP) outperforms its key peers in Monday’s London session. The British pound gains as investors remain unsure when the Bank of England (BoE) would begin lowering interest rates.

The UK’s annual headline inflation rate has back to the anticipated 2%.

Headline inflation in the United Kingdom (UK) has already reverted to the target rate of 2%. However, BoE officials view pricing pressures in the service sector as a favored inflation metric. Which Significantly greater than required to gain confidence in rate decreases.

Currently, financial markets expect the BoE to begin decreasing interest rates after the August meeting.

Meanwhile, the Pound Sterling is predicted to remain unclear ahead of the UK elections, which begin on July 4. According to the most recent exit polls, the opposition Labour Party is predicted to defeat UK Prime Minister Rishi Sunak’s Conservative Party.

Daily Market movers: Pound Sterling surpasses its peers.

The Pound Sterling does well versus the US Dollar (USD). The GBPUSD pair rises to 1.2680. As the US dollar falls following the May Personal Consumption Expenditures Price Index (PCE) report. Which showed that price pressures fell as expected. Annual core PCE inflation, the Federal Reserve’s preferred inflation metric, fell to 2.6% from 2.8% in the previous edition.
The predicted decrease in US inflation raises the prospect of Fed rate cuts in September. According to the CME FedWatch tool, 30-day Federal Fund futures price data indicates. That the chance of rate reduction in September is 63.4%. The data also shows that the Fed will lower rates twice this year. As opposed to once as indicated by officials in their most recent dot plot.
Fed officials continue to argue for retaining interest rates at current levels until they see evidence that inflation will fall to the goal rate of 2%. The Fed wants to see inflation fall for several months before shifting to policy normalization.
Last Raphael Bostic, President of the Atlanta Fed, stated this week. That rate reduction would be reasonable once they are persuaded that inflation is on a clear path to 2%. When questioned about a specific date for rate cuts, Bostic stated. “I continue to believe conditions will likely call for a cut in the federal funds rate in the fourth quarter of this year,” according to Reuters.

Pound Investors are waiting for fresh interest rate advice from the US ISM Manufacturing PMI.

This week, the US Dollar is predicted to exhibit volatility when the official ISM Purchasing Managers’ Index (PMI) and June employment figures are released. Pound Investors will focus on Monday’s ISM Manufacturing PMI data, which will be released at 14:00 GMT.
The Manufacturing PMI survey is likely to show that manufacturing activity improved but remained lower. The 50.0 criterion, which distinguishes between expansion and contraction, was observed at 49.0, up from 48.7 in the previous release.