GBP/USD softens to near 1.3050 on firmer US Dollar, dovish BoE | GBP/USD melemah mendekati 1,3050 karena Dolar AS menguat dan BoE bersikap dovish
The GBP/USD pair traded with slight losses around 1.3060 during the early European session on Monday. The safe-haven levels amid rising geopolitical risks supported the greenback and pushed the major lower. Investors will be closely watching the UK employment data, due for release on Tuesday.
The data released by the US Bureau of Labor Statistics on Friday showed that the annual Producer Price Index (PPI) rose 1.8% YoY in September, compared to a 1.9% increase seen in August, and above market expectations of 1.6%. Meanwhile, the core PPI rose 2.8% YoY in the same period, beating analysts' estimates of 2.7%. On a monthly basis, the US PPI was unchanged in September, while the core PPI rose 0.2% in the same reporting periode.
Fed officials have now shifted from fighting inflation to keeping the job market healthy, the other half of their so-called dual mandate. However, a stronger-than-expected jobs report in September and lower bets for a 50 basis point (bps) interest rate cut by the Federal Reserve (Fed) in November could lift the USD against the Pound Sterling (GBP).
On the GBP front, dovish remarks from Bank of England (BoE) Governor Andrew Bailey, who said the UK central bank may become a bit more aggressive in cutting interest rates, weighed on Cable. Markets have priced in a 90% chance that the BoE will cut interest rates in November. The BoE's Monetary Policy Committee (MPC) will meet on November 7 to announce its decision on interest rates. Ahead of the key UK event, UK employment data on Tuesday will be closely watched and may offer some clues on the state of the labour market, and the outlook for UK interest rates.
Source: FXStreet
