Early on Thursday, GBP/USD is trading around 1.3330, retreating from its recent two-month high. The main story? The US Dollar bounced back, even though American economic data has been underwhelming. People are keeping an eye on the calendar—big US numbers are on the way, especially the Weekly Initial Jobless Claims Report. Right now, there’s caution in the air, but with everyone talking about a possible Fed rate cut next week, the Pound isn’t falling too far.
Fed Rate Cut Hopes and the Kevin Hassett Factor
Soft US numbers, like the latest Manufacturing PMI and ADP jobs data, have traders doubling down on a December Fed rate cut. FedWatch odds are now near 90% for a 25-basis-point cut, and markets expect more easing in 2025. That takes some pressure off the Dollar, which gives GBP/USD a bit of breathing room for now.
But there’s another angle: possible changes at the Fed. Trump says he’ll announce his pick for the next Fed Chair early next year, and Kevin Hassett—known for pushing aggressive rate cuts—is in the running. If Hassett gets the job, expect a more dovish Fed, and that could pull the Dollar down over time.
BoE Rate Cut Talk Keeps the Pound in Check
Across the Atlantic, the Pound isn’t getting much of a lift either. Markets are bracing for the Bank of England to cut rates on December 18, with a 90% chance priced in of a 3.75% drop. The UK’s Autumn Budget is all about fighting inflation and lowering borrowing costs to spark investment. And then there’s BoE’s Catherine Mann, who recently flagged that global power shifts could threaten the Dollar’s dominance—a comment that’s only added more uncertainty to the whole currency picture.
