GBP/USD remains subdued near 1.3350 ahead of BoE policy decision

GBP/USD inches lower as BoE is expected to deliver a 25 basis point rate cut on Thursday.
Trump announced plans to finalize the Fed’s Chair and Kugler’s replacement by the end of the week.
Fed officials emphasized that ongoing uncertainty continues to pose a significant challenge to effective policy transmission.

Akhtar Faruqui FXStreet

GBP/USD holds losses after two days of gains, trading around 1.3350 during the Asian hours on Thursday. The pair depreciates ahead of the Bank of England’s (BoE) interest rate decision due later in the day. Traders will shift their focus toward US weekly Initial Jobless Claims due later in the North American session.

The Bank of England (BoE) is poised to deliver a 25 bps interest rate cut, with median market forecasts expecting the Monetary Policy Committee (MPC) to vote 7-to-3 in favor of a quarter-point trim, bringing the BoE’s main reference rate down to 4.0% from 4.25%. BoE Monetary Policy Report will also be eyed to assess of the prospects for UK inflation over the following two years.

Traders adopt caution ahead of further developments surrounding the next US Federal Reserve (Fed) Chairman. US President Donald Trump announced on Tuesday that he will appoint the Fed’s Chair and Kugler’s replacement by the end of the week. Market sentiment remains cautious as the weaker-than-expected labor market report boosts expectations that the US Federal Reserve (Fed) will deliver a 25 basis point rate cut in September.

Federal Reserve Bank of San Francisco President Mary Daly said on Wednesday that the Fed still has some ground to cover on its fight with inflation pressures despite overall progress. Daly highlighted that the Fed may be forced to act soon without having the full picture. Moreover, Boston Fed President Susan Collins and Fed Board of Governors member Lisa Cook cautioned that persistent uncertainty remains a major obstacle to effective policy transmission.

Economic Indicator

BoE Interest Rate Decision

The Bank of England (BoE) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoE is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Pound Sterling (GBP). Likewise, if the BoE adopts a dovish view on the UK economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for GBP.

AUD/USD bounces back toward 0.6950 on fresh USD supply

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USD/JPY struggles near 158.00 as USD retreats ahead of NFP

USD/JPY is struggling for fresh impetus near 158.00, moving away from the top end of its weekly range in the Asian session on Friday, after hotter-than-expected Tokyo CPI and amid a broad US Dollar retreat. Traders reposition themselves ahead of US Nonfarm Payrolls.

Gold remains capped below $4,200 as traders await US NFP for Fed rate cuts

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Pi Network retreats to key support level as selling pressure resurfaces

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US jobs report is due: We expect a hot one

In Japan, September Tokyo core CPI rose to 2.7% (cons: 2.4%). The figure was above the BOJ's 2% target for the first time since January. In commodities, Brent crude futures traded above USD 102/bbl on Friday morning after the WSJ reported that the Pentagon will be sending a third aircraft-carrier strike group and additional soldiers to the Middle East.

Markets are pricing a Fed pause. The jobs data says the hike is still coming

The market has rapidly changed its mind about the Federal Reserve (Fed). Only a week ago, investors saw an October interest-rate hike as the most likely outcome. However, softer inflation and cautious comments from policymakers have since turned a pause into the dominant scenario. Yet beneath that dramatic repricing, the US economy is sending a considerably less dovish message.