Daily digest market movers: Pound Sterling advances toward 1.3400
- The Pound Sterling extends its winning streak for the fifth trading day against the US Dollar (USD) on Tuesday. The GBP/USD pair climbs above 1.3350 as the US Dollar drops amid growing speculation that the Federal Reserve (Fed) could opt for a 50 basis points (bps) interest rate cut for the second time in a row when they meet in November. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, remains under pressure below 101.00.
- The Fed started reducing interest rates from the monetary policy meeting on Wednesday, in which the central bank cut its key borrowing rates by 50 basis points (bps) to a target range of 4.75%-5.00%. The Fed started the policy-easing cycle with a larger-than-usual rate cut as officials focused majorly on preventing job losses, with increased confidence that price pressures will return to the bank’s target of 2%.
- According to the CME FedWatch tool, the likelihood that the Fed will cut interest rates by 50 bps to 4.25%-4.50% in November is close to 51% from 29% a week ago.
- This week, investors will keenly focus on the US Personal Consumption Expenditures Price Index (PCE) data for August, which will be published on Friday. Economists expect the core PCE price index to have grown 2.7% from 2.6% in July.
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