The GBP/USD pair declines to approximately 1.3330 during the Asian trading session on Thursday. The major pair pulls back from a near two-month peak as demand for the US Dollar strengthens. Nonetheless, the increasing speculation regarding a potential Federal Reserve rate cut next week could limit its downside potential. Market participants will closely monitor the US weekly Initial Jobless Claims report scheduled for release later on Thursday. GBP/USD declines to approximately 1.3330 during Thursday’s Asian session. Weaker US economic indicators and the potential influence of White House economic adviser Kevin Hassett may exert downward pressure on the US Dollar. Market participants exhibit a strong belief that the Bank of England will implement a rate cut during its upcoming monetary policy announcement on December 18.
This week’s weaker US economic data, such as the Manufacturing PMI and ADP Employment Change, has solidified the argument for a rate reduction by the US central bank at the upcoming December meeting. This could exert pressure on the Greenback and provide support for the major pair. Market participants are currently assessing an 89% likelihood of a quarter-point rate reduction in the upcoming week, as per indications, with an anticipated easing of 89 basis points by the conclusion of next year.
On Tuesday, US President Donald Trump indicated that he intends to reveal his selection for the next head of the Federal Reserve to succeed Jerome Powell early next year. According to Reuters, White House economic adviser Kevin Hassett is currently positioned as the leading candidate for the next Federal Reserve chair. Hassett is regarded as a strong supporter of Trump’s push for more rapid and substantial interest rate cuts aimed at boosting economic activity, a move that could potentially weaken the USD.
The UK Autumn November budget has strengthened expectations for a December rate cut from the Bank of England, which may exert downward pressure on the Cable. UK Prime Minister Keir Starmer highlighted the importance of reducing inflation and interest rates to enhance business investment and stimulate economic growth. A significant number of experts anticipate that the UK central bank will reduce interest rates to 3.75% in December, with market indicators reflecting a 90% probability of this outcome. In a recent statement, BoE policymaker Catherine Mann indicated that the US Dollar’s position as a global reserve currency may be jeopardized due to the nation’s diminished backing for its allies and military partners.