Market Analysis

The GBP/USD pair has extended its winning streak for the fourth consecutive day, hovering around 1.2550 during Monday's Asian trading hours. This surge in the GBP/USD value is attributed to revised expectations regarding the Federal Reserve's interest rate adjustments in 2024, influenced by disappointing job figures from the United States.

On Friday, the US Nonfarm Payrolls report revealed a weaker-than-expected addition of 175,000 jobs in April, contrasting sharply with March's robust increase of 315,000 jobs. Furthermore, Average Hourly Earnings (YoY) for April rose by 3.9%, slightly below the anticipated 4.0%, with a monthly growth of 0.2%, falling short of the expected 0.3%.

As a result, the Federal Reserve is now anticipated to implement its first rate cut in September, diverging from previous forecasts indicating a move in November. According to the CME FedWatch Tool, the probability of a 25 basis points rate reduction during September's meeting has climbed to 48.8%, up from 43.8% a week ago.

Meanwhile, across the Atlantic, the Bank of England (BoE) is expected to maintain its rates at 5.25% during Thursday's meeting. Investors have postponed expectations of interest rate cuts by the BoE to September, citing concerns over robust wage growth in the United Kingdom, which is driving core inflation, the central bank's preferred measure.

In April, BoE Governor Andrew Bailey expressed optimism as UK inflation seemed on course to meet the 2% target, with the inflation rate dipping to 3.2% in March, the lowest level since September 2021.

GBP/USD

Paraphrasing text from "FX Street" all rights reserved by the original author.