Market Analysis

The GBP/USD pair remains steady near 1.3110 during the early European session on Wednesday. However, the risk-off sentiment ahead of key US events could lend support to the US Dollar (USD) and potentially push the pair lower. The US JOLTS Job Openings and Fed Beige Book are set to be released later on Wednesday.

Tuesday's data from the Institute for Supply Management (ISM) showed that the Manufacturing PMI edged up slightly to 47.2 in August from 46.8 in July, falling short of the market's expected 47.5.

According to the CME FedWatch tool, which gauges market expectations for the Fed funds target rate, there is a 61% probability that the Federal Reserve (Fed) will cut rates by 25 basis points (bps) at its September meeting, while the chances of a 50 bps cut stand at 39%.

Fed Chair Jerome Powell indicated last month that the time for monetary policy adjustment has arrived, hinting that the US central bank may begin easing policy at its upcoming September 17-18 meeting. These increased expectations of a Fed rate cut could put pressure on the USD in the near term.

The focus will shift to the US August employment data, due on Friday. Deutsche Bank economists have suggested that a rise in the unemployment rate could strengthen market expectations for a 50 bps rate cut by the Fed.

Meanwhile, the cautious sentiment continues to support the Greenback, although the Bank of England (BoE) is anticipated to undertake a milder interest rate cut cycle this year compared to other central banks. The GBP/USD pair is likely to be influenced by USD movements, given the absence of significant economic data from the UK.

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