Pound fluctuates between 1.294-1.299 as investors await U.S. economic data
Pound fluctuates between 1.294-1.299 as investors await U.S. economic data
On October 28, the British pound traded within the 1.294 – 1.299 range against the U.S. dollar as the market generally holds a positive view of the Labour government’s budget plans.
The U.K. government is expected to refrain from increasing spending due to persistently high inflation, while the Chancellor of the Exchequer Rachel Reeves plans to uphold the commitments made in the election manifesto.
Additionally, according to Sky News, the government decided not to raise income tax or national insurance contributions, but will increase this tax for employers. New incentives are also being prepared to improve housing availability.
Meanwhile, the U.S. Dollar Index (USD), which measures the dollar’s value against six major currencies, reached nearly a three-month high of about 104.60 on Monday.Traders are awaiting preliminary U.S. GDP data for the third quarter and non-farm payrolls (NFP) data for October to assess the current state of the U.S. economy and labor demand.
These data releases could influence speculation around further Federal Reserve (Fed) rate hikes in the coming months.
According to CME Fed Watch, 95.4% of traders expect a 25-basis-point rate cut in November. As for December, 75.5% expect another similar rate cut.
Andrew Bailey’s Statements Weigh on the Pound
Regarding the pound sterling, recent statements by Bank of England Governor Andrew Bailey on disinflation have weakened the appeal of the British currency.Currently, the market anticipates a dual BoJ rate cut in November and December, each by 25 basis points.
According to currency analysts Quek Ser Leang and Lee Sue Ann of UOB Group, the pound sterling (GBP) is expected to trade in a sideways range between 1.2930 and 1.2990. However, the downward momentum is slowing, and if GBP breaks above 1.300, it may hold above this level.
As previously noted, the British pound is gradually recovering against the U.S. dollar but is unlikely to fully offset losses for the month.
