The Pound Sterling shows an increase of over 0.30% as the Greenback declines to a ten-week low, as indicated by the US Dollar Index. The Federal Open Market Committee will commence its two-day meeting on Tuesday, during which a reduction in interest rates is anticipated from the Fed. The GBP/USD is currently trading at 1.3646, having risen from a daily low of 1.3592.
GBP/USD rises as the US Dollar declines, even in the face of robust US Retail Sales and Industrial Production figures. Markets are pricing in a 25-basis point Fed cut, while a minority is considering a 50-basis point reduction; attention is on FOMC projections and the dot plot. The UK payrolls have declined for the seventh consecutive month; however, the Bank of England is anticipated to maintain current interest rates during the forthcoming meeting.
> Sterling surges to an 11-week peak as traders overlook robust US Retail Sales, with attention now turning to potential Fed rate cuts: Sterling is currently positioned at eleven-week highs against the US Dollar, which did not show appreciation as Retail Sales data unexpectedly exceeded estimates in August, as reported by the US Commerce Department on Tuesday. In August, Retail Sales increased by 0.6% month-over-month, matching the growth rate of the prior month and surpassing expectations of 0.2%. Sales for the Control Group, utilized in the calculation of Gross Domestic Product figures, increased by 0.7% month-over-month, an improvement from July’s figure of 0.5%. Despite the robust data, this will not deter the Fed from implementing policy easing as the labor market continues to decline. In the meantime, US Industrial Production experienced a 0.1% month-over-month increase in August, surpassing the -0.1% month-over-month decline recorded in July. In the UK, recent jobs data indicated a decline in payrolls for the seventh consecutive month, suggesting a cooling labor market. However, this trend may not influence the Bank of England to alter interest rates during Thursday’s monetary policy meeting. Market participants are directing their attention towards the Federal Reserve’s upcoming decision on Wednesday. Market participants had completely accounted for a 25 basis point reduction, although a small fraction is considering a 50 basis point cut. Alongside the decision, Fed officials will revise their economic forecasts and outline the trajectory for interest rates for the rest of the year.