Pound falls to three-week low, markets expect BoE cut in November
|The British pound continues to lose ground on Monday after a dismal week. In the European session, GBP/USD is trading at 1.3063, down 0.48% on the day and its lowest level since October 12. The pound can’t find its footing against the rejuvenated US dollar and fell 1.9% last week.
Much of the pound’s slide was driven by comments from Bank of England Governor Bailey. On Thursday, Bailey said that the BoE could cut rates more aggressively if inflation continues to fall. The pound reacted with a slide of 1% after the comments as the markets took Bailey’s remarks as a signal that the central bank is ready to ratchet up the pace of rate cuts. The BoE trimmed rates in August for the first time in four years but paused in September. Another rate cut is widely expected at the November meeting.
A day after Bailey’s remarks, the BoE’s Chief Economist Huw Pill sought to dampen the excitement over potential rate cuts. Pill urged caution and called for a gradual easing of policy. Pill added that service inflation and wage growth were “a continued source of concern”.
US Nonfarm Payrolls blow past estimate
The US labor market remains resilient, as September nonfarm payrolls soared by 254 thousand, up from a revised 159 thousand in August and crushing the market estimate of 140 thousand. This was the strongest job report in six months. The unemployment rate dipped lower to 4.1%, compared to 4.2% in August and below the market estimate of 4.2%. The markets have raised the odds of a 25-basis point cut at the Fed November meeting to 87%, compared to 65% one week ago.
GBP/USD technical
- GBP/USD is testing support at 1.3072. Below, there is support at 1.3018 - 1.3123 and 1.3177 are the next resistance lines.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.