- The Pound Sterling declines to a fresh two-month low against the US Dollar ahead of BoE Bailey’s speech.
- Bailey may reiterate a dovish stance on the interest-rate outlook, signaling that more interest-rate cuts are on the way.
- The US Dollar outlook remains upbeat as uncertainty increases ahead of the US presidential election.
The Pound Sterling (GBP) weakens against its major peers on Tuesday as traders brace for the Bank of England (BoE) Governor Andrew Bailey’s speech, who will speak at 13:25 GMT at the Bloomberg Global Regulatory Forum in New York. In his speech, Bailey is expected to provide fresh guidance on the interest-rate outlook, a key driver for the Pound Sterling’s valuation.
In an interview with the Guardian newspaper at the start of the month, Bailey stressed the need to cut interest rates aggressively if price pressures continue to ease. He said the BoE could become “a bit more activist” and “a bit more aggressive” in its approach to lowering rates if there was further welcome news on inflation.
Meanwhile, a column written by BoE’s rate-setter Megan Greene, published in the Financial Times on Monday, indicated that the policymaker favored a gradual rate-cut approach, with doubts over whether forward consumption levels will be strong or weak.
According to market speculation, traders are confident about the BoE cutting interest rates by 25 basis points (bps) to 4.75% in November. For December, traders are also betting heavily for another 25 bps cut, Reuters reported.
On the economic front, investors will focus on the flash S&P Global/CIPS Purchasing Managers Index (PMI) for October, which will be published on Thursday.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.01% | 0.11% | -0.03% | -0.01% | -0.42% | -0.38% | -0.10% | |
| EUR | 0.00% | 0.12% | -0.02% | -0.01% | -0.43% | -0.36% | -0.09% | |
| GBP | -0.11% | -0.12% | -0.14% | -0.12% | -0.54% | -0.49% | -0.20% | |
| JPY | 0.03% | 0.02% | 0.14% | 0.01% | -0.40% | -0.38% | -0.07% | |
| CAD | 0.01% | 0.01% | 0.12% | -0.01% | -0.40% | -0.38% | -0.08% | |
| AUD | 0.42% | 0.43% | 0.54% | 0.40% | 0.40% | 0.04% | 0.32% | |
| NZD | 0.38% | 0.36% | 0.49% | 0.38% | 0.38% | -0.04% | 0.29% | |
| CHF | 0.10% | 0.09% | 0.20% | 0.07% | 0.08% | -0.32% | -0.29% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Daily digest market movers: Pound Sterling weakens against US Dollar
- The Pound Sterling falls to near1.2970 against the US Dollar (USD) in Tuesday’s North American session, the lowest level seen in two months. The GBP/USD pair is expected to extend its downside as the US Dollar strives to break above the 11-week high amid United States (US) election uncertainty. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, clings to gains near 104.00.
- A sheer strength in the US Dollar suggests that traders are pricing in former US President Donald Trump’s victory in presidential elections, which are just two weeks away. Trump vowed to hike tariffs and lower taxes in his election promises if he wins. The scenario will undermine the currencies of the US’s close trading partners and keep interest rates escalated. However, the latest national polls have shown a neck-and-neck competition between Trump and US Vice President and Democratic candidate Kamala Harris.
- Regarding the interest rate outlook, traders have priced in two rate cuts of 25 bps by the US Central Bank in November and December. The Fed can afford to avoid a sizeable interest rate cut in November, as earlier expected after a slew of upbeat US economic data for September diminished risks of an economic slowdown.
Technical Analysis: Pound Sterling slides to near 1.2970
The Pound Sterling trades below the psychological support of 1.3000 in North American trading hours. The outlook of the GBP/USD pair remains bearish as it hovers below the 50-day Exponential Moving Average (EMA), which trades around 1.3090.
The 14-day Relative Strength Index (RSI) hovers near 40.00. A breakdown through the same will strengthen the bearish momentum.
Looking down, the upward-sloping trendline drawn from the April 22 low of 1.2300 will be a major support zone for Pound Sterling bulls near 1.2920. On the upside, the Cable will face resistance near the 20-day EMA around 1.3110.
