The Pound Sterling weakens against major currencies as analysts predict four interest rate cuts by the Bank of England this year. The US Dollar strengthens near a two-year high as the Federal Reserve is expected to reduce rates less aggressively.
The Pound Sterling trades weakly against its major peers as analysts at Goldman Sachs expect the BoE to deliver four interest rate cuts this year. The US Dollar trades close to a fresh two-year high as the Fed is expected to reduce interest rates less than previously anticipated this year. Investors await an array of US labor market data on Thursday for fresh Fed policy guidance.
The Pound Sterling (GBP) weakens against its major peers on Thursday amid growing expectations that the Bank of England (BoE) will follow a less gradual rate-cut approach this year. The BoE reduced its key borrowing rates by 50 basis points (bps) to 4.75% in 2024. BoE’s policy-easing pace was slow compared to its European and North American peers as inflation in the United Kingdom (UK) service sector remained highly stubborn due to sticky wage growth. However, a slightly faster rate-cut pace is expected this year, as a slowdown in labor demand would tame price pressures. In a note this week, analysts at Goldman Sachs said that the BoE will cut interest rates each quarter through the year. This indicates that the BoE policy rate will decline to 3.75% by the year-end. Daily digest market movers: Pound Sterling edges lower against US Dollar The Pound Sterling trades cautiously near the psychological support of 1.2500 against the US Dollar (USD) at the start of the year. The GBP/USD pair ticks lower in Thursday’s European session and is expected to face more selling pressure ahead as the US Dollar Index (DXY) trades close to a more-than-two-year high at around 108.50. The greenback is expected to strengthen as investors expect incoming policies from President-elect Donald Trump to boost economic growth and inflationary pressures in the United States (US). This scenario will compel the Federal Reserve (Fed) to slow the pace of rate cuts, which will be favorable for the US Dollar and US Treasury yields. Meanwhile, Fed officials have already recommended fewer interest rate cuts this yea
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