GBP/USD Weakens Ahead of BoE Interest Rate Decision
The British pound (GBP) weakened against the US dollar (USD) at the start of this week, with the GBP/USD pair moving in the 1.3260–1.3265 range. This weakening occurred after a solid rebound from its lowest level since May 12th at around 1.3140 last Friday. However, downward pressure appears limited as traders are adopting a wait-and-see approach ahead of the Bank of England's (BoE) key decision on Thursday.
The BoE is expected to cut interest rates by 25 basis points to 4%, following weakening UK labor market data and slowing wage growth. However, persistently high inflation means the central bank is likely to remain cautious in its actions. This policy outlook will determine the future direction of the pound and have a direct impact on the GBP/USD pair.
On the other hand, the US dollar recovered after being pressured by the weak US employment report. The Nonfarm Payrolls (NFP) data, which fell well short of expectations and was sharply revised up for June, reinforced expectations that the Fed would begin cutting interest rates in September. Political tensions also escalated after President Trump renewed his criticism of Fed Chairman Jerome Powell and demanded a rate cut, potentially undermining the perception of the central bank's independence. This could limit USD strength and keep the GBP/USD pair stable in the short term. (ayu)
Source: Newsmaker.id
