As the US dollar declines due to growing Fed rate cut expectations in December, the GBP/USD exchange rate maintains its gains.
The odds of a Fed rate drop in December are now 71%, up from 66% the day before, according to the CME FedWatch Tool.
Since lower inflation figures fueled growing anticipation for rate reduction by the BoE, the value of the pound sterling may decline.
After three days of losses, the GBP/USD pair is slightly up, trading around 1.3160 on Friday during Asian hours. The pair maintains its strength as the US dollar (USD) falters in the face of strengthening Fed (Fed) rate cut wagers. The CME FedWatch Tool indicates that markets are now pricing in a 71% chance of a December rate drop from 66% the day before.
Though the Fed Chair Jerome Powell noted that the central bank is finding it difficult to balance its dual mandate of controlling inflation and supporting employment due to limited data availability amid the ongoing US government shutdown, the GBP/USD pair lost ground as the Greenback gained support. Powell warned that until official data reporting resumes, officials might need to take a wait-and-see stance. The picture is still unclear, he added, adding that another rate cut in December is far from probable.
By a vote of 10–2, the US Fed lowered its benchmark rate by 25 basis points on Wednesday, bringing it down to a range of 3.75%–4.0%. There was disagreement over the decision; Kansas City Fed President Jeffrey Schmid voted to maintain rates at their current level, while Fed Governor Stephen Miran favored a more significant 50 basis point drop.
Softer inflation figures, including additional drops in food price inflation reported by the BRC, spurred rising expectations for rate reduction by the Bank of England (BoE), which put pressure on the pound sterling (GBP). Concerns also grew that economic growth would be severely hampered by the next November budget.
UK Prime Minister Keir Starmer refrained from ruling out possible hikes in value-added tax, national insurance, or income tax during Wednesday's parliamentary session. A £20 billion deficit in public finances could arise from the Office for Budget Responsibility's (OBR) planned lowering of the UK's productivity growth prediction by roughly 0.3%, according to sources.
The odds of a Fed rate drop in December are now 71%, up from 66% the day before, according to the CME FedWatch Tool.
Since lower inflation figures fueled growing anticipation for rate reduction by the BoE, the value of the pound sterling may decline.
After three days of losses, the GBP/USD pair is slightly up, trading around 1.3160 on Friday during Asian hours. The pair maintains its strength as the US dollar (USD) falters in the face of strengthening Fed (Fed) rate cut wagers. The CME FedWatch Tool indicates that markets are now pricing in a 71% chance of a December rate drop from 66% the day before.
Though the Fed Chair Jerome Powell noted that the central bank is finding it difficult to balance its dual mandate of controlling inflation and supporting employment due to limited data availability amid the ongoing US government shutdown, the GBP/USD pair lost ground as the Greenback gained support. Powell warned that until official data reporting resumes, officials might need to take a wait-and-see stance. The picture is still unclear, he added, adding that another rate cut in December is far from probable.
By a vote of 10–2, the US Fed lowered its benchmark rate by 25 basis points on Wednesday, bringing it down to a range of 3.75%–4.0%. There was disagreement over the decision; Kansas City Fed President Jeffrey Schmid voted to maintain rates at their current level, while Fed Governor Stephen Miran favored a more significant 50 basis point drop.
Softer inflation figures, including additional drops in food price inflation reported by the BRC, spurred rising expectations for rate reduction by the Bank of England (BoE), which put pressure on the pound sterling (GBP). Concerns also grew that economic growth would be severely hampered by the next November budget.
UK Prime Minister Keir Starmer refrained from ruling out possible hikes in value-added tax, national insurance, or income tax during Wednesday's parliamentary session. A £20 billion deficit in public finances could arise from the Office for Budget Responsibility's (OBR) planned lowering of the UK's productivity growth prediction by roughly 0.3%, according to sources.
