The GBP/USD pair remains stable around 1.3245 in the Asian session on Monday as market participants analyze the implications of the UK’s Autumn Budget. The potential downside for the major pair appears constrained, given the increasing anticipation of a Federal Reserve interest rate cut in the upcoming December meeting. The US November ISM Manufacturing Purchasing Managers Index report is scheduled for release later on Monday. GBP/USD remains steady at approximately 1.3245 during the Asian session on Monday. The relief from the UK budget may bolster the Pound Sterling. The likelihood of a Fed cut has increased to 87% following dovish comments from the Fed and prevailing uncertainty.
UK Chancellor Rachel Reeves unveiled the Autumn Budget last week, detailing tax increases and modifications to business rates, benefits, and pensions. The Office for Budget Responsibility has adjusted its 2025 growth forecast for the UK, increasing it from 1.0% to 1.5% in light of the recent budget announcement. Nonetheless, the OBR has revised its growth projections down to 1.4% for 2026 and 1.5% for each of the subsequent four years. The 2025 UK Autumn Budget may result in a slight relief rally for the Pound Sterling against the US Dollar in the near term.
Market participants are raising their expectations for a potential reduction in interest rates by the Federal Reserve, influenced by the prevailing uncertainty and the dovish remarks from Fed officials. This dynamic is contributing to a decline in the value of the Greenback, presenting challenges for the currency pair in question. The implied probability of a 25 basis points rate cut at the Federal Reserve’s December policy meeting has risen to 87%, as indicated by US Fed funds futures, up from 71% just a week prior, based on data.
Recently, Fed Governor Christopher Waller indicated that current data suggests the labor market is sufficiently weak to justify a further quarter-point reduction at the upcoming December meeting. In the meantime, San Francisco Fed President Mary Daly expressed her support for a reduction in the interest rate next month, citing a sudden decline in the job market, which she believes is both more probable and more challenging to address than a rise in inflation.