Pound Strengthens Amid Rate Cut Bets

📈 Pound Sterling Extends Gains Amid Focus on Key UK-US Economic Data

At the start of the trading week, the British Pound (GBP) continues its upward momentum against the US Dollar (USD), reaching near 1.3480. This rally is driven by rising expectations of interest rate cuts by the Federal Reserve and a weakening US Dollar.

🔍 Key Market Highlights:

▪️ The US Dollar Index (DXY) has declined by 0.17%, trading near 98.00.
▪️ The CME FedWatch tool shows an 88% probability of a rate cut by the Fed in its September meeting.
▪️ Fed Governor Michelle Bowman has signaled confidence in three rate cuts this year.
▪️ In the UK, following the Bank of England’s recent rate cut, expectations for further easing have shifted to February.
▪️ Economists expect the UK unemployment rate to remain at 4.7%, with wage growth moderating to 4.7%.

📊 Technical Analysis:

▪️ The GBP/USD pair is trading above the 20-day Exponential Moving Average (EMA) at 1.3408.
▪️ The 14-day Relative Strength Index (RSI) has rebounded above 50, indicating a potential bullish reversal.
▪️ Key support lies at the August 1 low of 1.3140, while resistance is seen near the July 23 high of 1.3585.

🧭 Summary:

The Pound’s strength against the Dollar reflects a mix of fundamental drivers, policy expectations, and technical signals. In the coming days, UK labor market data and US CPI figures will be pivotal in shaping market sentiment. Close monitoring of these indicators is essential for informed trading decisions.