|

Pound Sterling advances against US Dollar ahead of US JOLTS Job Openings data

  • The Pound Sterling rises to near 1.3450 amid risks of a likely US government shutdown.
  • US Democrats want Republicans to undo cuts in the healthcare budget.
  • BoE’s Ramsden argues in favor of interest rate cuts to support weakening job demand.

The Pound Sterling (GBP) extends its upside to near 1.3450 against the US Dollar (USD) during the European trading session Tuesday. The GBP/USD pair advances as the US Dollar trades cautiously amid fears of a potential United States (US) government shutdown, with Republicans struggling to persuade Democrats to support short-term funding bill before Tuesday’s midnight deadline.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally lower around 97.80.

Prospects of a partial US government shutdown have escalated significantly, following comments from Vice President (VP) JD Vance to CNBC, after meeting with Democrats, recognising that the administration could face a shutdown. “I think we’re headed to a shutdown because the Democrats won’t do the right thing,” Vance said.

Democrats have been denying approving the stopgap bill in the House of Senate as they want White House to roll back cuts in healthcare benefits announced earlier this year.

Meanwhile, the US Labour and Commerce departments have warned that the closure of statistical agencies, in the event of a partial shutdown, could halt the scheduled releases of key economic indicators, including official employment data for September.

Pound Sterling drops as BoE's Ramsden warns of labor market risks

  • The Pound Sterling faces slight selling pressure on Tuesday. The British currency trades marginally lower as Bank of England (BoE) Deputy Governor Dave Ramsden has argued in favor of reducing interest rates amid growing United Kingdom (UK) labor market concerns. Ramsden is also confident that inflationary pressures will return to the central bank as interest rates are still restrictive.
  • “We have seen the labour market continuing to loosen with wage growth normalising,” Ramsden said in a panel discussion organised by the European Central Bank (ECB) in Frankfurt on Monday, and added that "I [Ramsden] see that as supporting a continuation of the core disinflation process, which anchors his view on the inflation outlook," Reuters reported.
  • BoE Ramsden’s support for interest rate cuts is unfavorable for the Pound Sterling, as he was among seven of nine Monetary Policy Committee (MPC) members who voted to hold policy rates steady at 4% in the September policy meeting.
  • Meanwhile, UK Q2 Gross Domestic Product (GDP) data has come in stronger than previously estimated on an annual basis. The figures showed that the economy rose by 1.4% YoY, faster than the preliminary release of 1.2%. Quarter-on-quarter GDP growth remained in line with flash estimates of 0.3%.
  • In Tuesday’s session, the major trigger for the GBP/USD pair will be the US JOLTS Job Openings data for August, which will be published at 14:00 GMT.  US employers are expected to have posted fresh 7.1 million jobs, in line with the prior reading of 7.18 million.

Technical Analysis: Pound Sterling stays below 20-day EMA

The Pound Sterling gains marginally higher to near 1.3450 against the US Dollar on Tuesday. However, the near-term outlook for the Cable remains bearish as it stays below the 20-day Exponential Moving Average (EMA), which trades around 1.3483.

The 14-day Relative Strength Index (RSI) rebounds from 40.00, currently at 46. The pair would remain sideways if the RSI is stable in the 40.00-60.00 range.

Looking down, the August 1 low of 1.3140 will act as a key support zone. On the upside, the September 17 high of 1.3726 will act as a key barrier.

Author

Sagar Dua

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

More from Sagar Dua
Share:

Editor's Picks

AUD/USD falls to near 0.7100 after slipping below 50-day EMA

AUD/USD depreciates after registering minor gains in the previous day, trading around 0.7120 during the Asian hours. The technical analysis of the daily chart shows the pair consolidating sideways within a rectangle pattern, as neither bulls nor bears gain control. The AUD/USD pair is holding a slight bearish tone however as it sits beneath both the nine-day and 50-day EMAs.

160.00: USD/JPY back near intervention territory after upbeat US jobs report

US Nonfarm Payrolls beat expectations by a wide margin in May, with 172K jobs added. The US Dollar rebounds after the release, helping USD/JPY recover from its intraday lows. Warnings from Japanese authorities continue to limit upside potential near the 160.00 threshold.

Gold targets $4,300 amid stronger Dollar

Gold faces increasing selling interest and navigates the area of three-month lows near the $4,300 mark per troy ounce on Friday. The precious metal’s decline comes as traders assess the stronger-than-expected NFP, while the bid bias in the Greenback and higher US Treasury yields also collaborate with the retracement.

Cardano hits five-year low even as Hoskinson clarifies "break" isn't an exit

Cardano (ADA) price is down 10% at press time on Friday, extending losses over 30% so far this week amid Charles Hoskinson's clarification that "break" isn't an exit.

Week ahead – Fed countdown begins amid US inflation data and geopolitical risks

Fed Chair Warsh’s first meeting approaches as key US inflation data could reshape expectations. Oil prices remain elevated as US-Iran talks continue; tariffs also return to the spotlight. ECB is expected to hike; will it be a one-off move or is July live?

The US economy defies the rules: 100 days into the Oil shock and the recession signal is still missing

More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.