- Pound Sterling holds below 1.3000 against the US Dollar as markets anticipate a busy US data week and the UK’s Autumn Forecast Statement.
- UK Chancellor Rachel Reeves is set to announce substantial funding for the health service sector.
- Investors look to the upcoming US JOLTS Job Openings report for new insights into labor demand.
The Pound Sterling (GBP) is showing a subdued performance against its major counterparts on Tuesday, trading cautiously ahead of the UK’s Autumn Forecast Statement, scheduled for release on Wednesday. This announcement marks the first budget by a Labour government in over 15 years.
UK Chancellor of the Exchequer Rachel Reeves is expected to outline tax increases and expanded public spending, as hinted by Prime Minister Keir Starmer in his Birmingham speech on Monday. Starmer emphasized the importance of raising taxes to "prevent austerity and rebuild public services," as reported by BBC News.
Reeves has also highlighted the need for significant investment in the National Health Service (NHS) to address a decade of underfunding, according to Reuters. "I am putting an end to the neglect and underinvestment (the NHS) has seen for over a decade now," she stated.
Market participants are closely watching these spending plans for their potential influence on the Bank of England’s (BoE) monetary policy, especially as a Reuters poll suggests the BoE may cut rates by 25 basis points (bps) to 4.75% in its November 7 meeting, marking the second rate cut this year after holding at 5% in September.
Daily Digest Market Movers: Pound Sterling Mirrors USD's Sideways Action
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The Pound Sterling trades in a narrow range below the 1.3000 level against the US Dollar (USD) in Tuesday’s London session, as the GBP/USD pair consolidates. Investors await a series of key U.S. economic data releases this week, which are expected to provide insights into the Federal Reserve's (Fed) policy direction by year-end.
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This week’s focus will be on preliminary figures for Q3 Gross Domestic Product (GDP), the Personal Consumption Expenditure Price Index (PCE), Nonfarm Payrolls (NFP), and the ISM Manufacturing Purchasing Managers’ Index (PMI). Together, these reports will offer a snapshot of the U.S. economy’s growth and inflationary pressures.
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Recent remarks from Fed officials reflect concerns about downside risks to economic growth, with strong confidence that inflation is progressing towards the Fed's 2% target. If upcoming data signals solid economic growth and robust labor demand, it may reduce expectations for significant Fed rate cuts. However, weaker economic and job market indicators would bolster expectations for rate reductions.
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The CME FedWatch tool indicates that market participants are pricing in a 25 basis-point (bps) rate cut for both November and December meetings. In Tuesday’s New York session, attention turns to the U.S. JOLTS Job Openings report for September, due at 14:00 GMT. Forecasts suggest job openings may have slightly decreased to 7.99 million from August’s 8.04 million.
Technical Analysis: Pound Sterling Holds Below 1.3000
Pound Sterling trades within Monday’s range against the US Dollar (USD) in the European session, hovering near a critical level around 1.2900 on the daily chart within a Rising Channel formation. The near-term outlook remains mixed, with the pair trading below the 50-day Exponential Moving Average (EMA) at 1.3070, signaling some uncertainty.
The 14-day Relative Strength Index (RSI) has rebounded close to the 40 mark, with a bearish signal likely if it fails to move higher. On the downside, the 200-day EMA at 1.2845 provides significant support for Sterling bulls. Resistance, meanwhile, sits at the 20-day EMA around 1.3060, setting key levels to watch for any potential breakouts.
