The GBP/USD pair shows upward movement on Monday as the US Dollar relinquishes some of the gains achieved last week, with a packed economic calendar in the US on the horizon. The currency pair is currently trading at 1.3430, reflecting an increase of 0.24%.
Sterling appreciates as the Fed is anticipated to implement two rate cuts, whereas the BoE is projected to maintain steady rates in light of stalled disinflation. BoE’s Ramsden expresses confidence that a restrictive policy will effectively tame inflation, whereas Cleveland Fed’s Hammack cautions that inflation continues to be stubbornly high. The potential for a US government shutdown increases as the BLS indicates a data blackout, which could overshadow the positive Pending Home Sales figures and the forthcoming remarks from Fed officials.
> GBP/USD experiences an upward movement despite ongoing fiscal concerns in the UK, driven by the divergence in central bank policies and heightened political attention during the Labor conference : Concerns regarding a possible government shutdown in the US are impacting the US Dollar, even as apprehensions about the UK’s financial situation persist. On Monday, the Labor Party conference commenced in Liverpool, positioning itself as a focal point for investors, as noted by Chris Turner. The divergence in central bank policies suggests potential for additional gains in the GBP/USD pair. The Bank of England is anticipated to maintain its current rates at the upcoming meeting, whereas market participants have factored in nearly two rate reductions by the Federal Reserve. BoE Deputy Governor Dave Ramsden expressed a hawkish stance, noting that the UK’s disinflationary trend has come to a halt. He expressed that he is “confident we will get inflation back to target with current restrictive rates and market expectations.” Cleveland Fed’s Beth Hammack emphasized her hawkish position, stating that inflation remains excessively high and the trajectory is unfavorable. She noted that tariffs significantly contribute to the halt in the disinflation process. Second-tier data in the US indicated that Pending Home Sales experienced an improvement in August, increasing by 4% month-over-month, a notable recovery from the upwardly revised -0.3% contraction in July and surpassing forecasts of a 0.3% expansion.
In the meantime, recent reports indicate that the US Bureau of Labor Statistics is expected to withhold economic data amid the Government shutdown. The BLS will halt all functions in the event of a Government shutdown. Next on the agenda, the US economic calendar will showcase additional Fed speakers, including Regional Fed Presidents Alberto Musalem, John Williams, and Raphael Bostic, making their remarks.