The GBP/USD pair is trading flat around 1.3280 during Tuesday’s Asian session, as market participants await the release of the US ISM Services PMI later in the day. However, increasing expectations of Federal Reserve (Fed) rate cuts could put downward pressure on the US Dollar (USD) against the Pound Sterling.
Weaker-than-expected US job data released last Friday has intensified speculation about imminent Fed rate cuts. July’s employment report showed disappointing job growth, and previous Nonfarm Payroll (NFP) figures were revised lower by a significant 258,000 jobs—signaling worsening labor market conditions in the US.
As a result, markets now see a nearly 95% probability that the Fed will cut rates in the upcoming meeting, with over 63 basis points of rate reductions priced in by December, according to Reuters.
Looking ahead, the Bank of England (BoE) policy decision on Thursday is in focus. The central bank is broadly expected to cut interest rates to support the economy amid growing unemployment concerns and the negative impact of US trade tariffs.
Market participants have priced in over an 80% chance of a BoE rate cut in August and anticipate an additional 25 basis point reduction by year-end. Investors will also be paying close attention to BoE Governor Andrew Bailey’s remarks following the meeting—any dovish signals could weigh on the British Pound in the short term.
