- GBP/USD holds steady around 1.3110 during Wednesday’s early European session.
- The US ISM Manufacturing PMI came in weaker than expected for August.
- Investors anticipate the Bank of England will keep interest rates unchanged in September.
The GBP/USD pair remains steady near 1.3110 during the early European session on Wednesday. However, risk-off sentiment ahead of key US events could support the US Dollar (USD) and potentially push the pair lower. The US JOLTS Job Openings and Fed Beige Book are scheduled for release later today.
Data from the Institute for Supply Management (ISM) on Tuesday showed the Manufacturing PMI increased slightly to 47.2 in August from 46.8 in July, though it fell short of the market consensus of 47.5.
According to the CME FedWatch tool, which gauges market expectations for the Fed funds target rate, there is a 61% chance of a 25 basis point rate cut at the September meeting, and a 39% chance of a 50 basis point cut.
Fed Chair Jerome Powell indicated last month that "the time has come" for monetary policy adjustments, suggesting the Federal Reserve may begin easing at its upcoming meeting on September 17-18. This expectation for a rate cut could weigh on the USD in the near term.
Friday's US August employment data will be closely watched. Deutsche Bank economists suggest that a rise in the unemployment rate could bolster expectations for a 50 basis point rate cut by the Fed.
Meanwhile, the Greenback's cautious momentum persists, though the Bank of England (BoE) is expected to implement a shallower rate cut cycle this year compared to other central banks. With no major economic data releases from the UK, GBP/USD will likely be influenced primarily by USD dynamics.
