• The Pound Sterling holds strength against the US Dollar to near 1.3200 driven by the Fed’s Powell dovish guidance on interest rates.
• Fed Powell’s comments suggested he remains concerned over downside risks to the US labor market.
• BoE’s Governor Andrew Bailey refrained from committing a specific interest-rate cut path.

The Pound Sterling (GBP) trades close to an almost two-and-a-half-year high near 1.3200 against the US Dollar (USD) in Monday’s London session. The GBP/USD pair aims to extend its seven-day winning streak as the US Dollar weakens after the unambiguous announcement from Federal Reserve (Fed) Chair Jerome Powell, who said that the central bank will start cutting interest rates in September.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, hovers near a fresh year-to-day (YTD) low of 100.53.

In the speech at the Jackson Hole (JH) Symposium on Friday, Fed Powell said: “The time has come for policy to adjust.” However, he refrained from committing to a preset interest-rate cut path and preferred to remain data-dependent, saying that "the direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."

Powell’s comments indicated that the central bank is now more worried about deteriorating labor market conditions and that he is confident that price pressures will return to the desired target of 2%. He commented that upside risks to inflation have diminished and downside risks to the labor market have increased. “We will do everything we can to support a strong labor market as we make further progress toward price stability," Powell added.

This week, the major trigger for the US Dollar will be the United States (US) core Personal Consumption Expenditure Price Index (PCE) data for July, which will be published on Friday. Month-over-month, PCE inflation is estimated to have grown steadily by 0.2%.