The Pound Sterling (GBP) continues underperforming its major peers, rattled by rising borrowing costs on the United Kingdom (UK) government’s debt.
The Pound Sterling remains under pressure as investors expect higher UK gilt yields could force Chancellor Reeves to cut spending and raise taxes in the Autumn Budget. BoE’s Breeden said recent evidence supports a gradual withdrawal of policy restrictiveness. The next move in the US Dollar will be influenced by the US NFP data for December. The Pound Sterling continues underperforming its major peers, rattled by rising borrowing costs on the United Kingdom government’s debt.
On the contrary, soft numbers will ease fears of inflationary pressures remaining persistent. Economists expect Average Hourly Earnings to have grown at a steady pace of 4% year-over-year. On a month-on-month basis, the wage growth measure is estimated to have risen by 0.3%, slower than the 0.4% in November. According to the CME FedWatch tool, traders are confident that the Fed will not cut interest rates till the March meeting but are divided over the policy announcement in May.
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