Dovish sentiment affects the value of the British pound
Dovish sentiment affects the value of the British pound
The GBP/USD pair drops below 1.30 as the Bank of England prepares for rate cuts. In recent hours, the British pound sterling has failed to break the 1.30 level against the US dollar, trading below 1.2975.
The pound's decline is fueled by expectations that the Bank of England (BoE) will execute two consecutive 25 basis point interest rate cuts in November and December.
Data from the Office for National Statistics showed that the Consumer Price Index (CPI) fell to 1.7% year-over-year in September, down from 2.2% in August.
At the same time, the estimated number of vacancies in July-September decreased to 841,000, which is 34,000 fewer than in the second quarter of 2024.
On Tuesday, BoE Governor Andrew Bailey, speaking at a Bloomberg event in New York, emphasized the need to strengthen monitoring and shift from rule-making to supervision, allowing for "better tracking of financial activities outside the traditional banking sector."
Dollar regains strength
Meanwhile, the US dollar is strengthening as the likelihood of further aggressive rate cuts by the Federal Reserve decreases.
Data from the CME Fed Watch tool shows that with a probability of 89% traders expect a 25 basis point rate cut in November, while an 11% probability assumes rates will remain unchanged.
As San Francisco Federal Reserve Bank President Mary Daly recently stated, the US economy is clearly in a better position as inflation has significantly decreased, and the labor market is returning to a more sustainable path.
The US Dollar Index (DXY), which tracks the US dollar against six major currencies, is also trading near a two-month high at 104.20.
Technically, the GBP/USD pair remains under pressure, with the next key support for the pound around 1.2840, while 1.3100 serves as a potential resistance level if the British currency attempts to recover.
