- GBP/USD depreciates ahead of key economic data from the United Kingdom.
- The US Dollar receives support from the diminishing likelihood of a Fed rate cut in December.
- President Trump said he “would love” to remove Fed Chair Jerome Powell immediately.
GBP/USD remains subdued for the fourth consecutive session, trading around 1.3130 during the Asian hours on Wednesday. Traders await the United Kingdom (UK) Consumer Price Index (CPI), PPI Core Output, and Retail Price Index data for October due later in the day.
Any moderation in UK price pressures, combined with a softening labor market and slowing GDP growth, would reinforce expectations of a December rate cut by the Bank of England (BoE), putting additional pressure on the Pound Sterling (GBP).
The GBP/USD pair also depreciates as the US Dollar (USD) maintains its position due to the diminishing likelihood of a US Federal Reserve (Fed) rate cut in December. Traders await the highly anticipated September Nonfarm Payrolls data due on Thursday.
The CME FedWatch Tool indicated that markets are now pricing in a 49% odds of the Fed delivering a 25-basis-point rate cut at its December meeting, down from 67% probability that markets priced a week ago.
US Initial Jobless Claims showed on Tuesday that 232,000 people filed first-time claims for state unemployment insurance in the week ended October 18. Meanwhile, an Automatic Data Processing (ADP) report showed that employers cut 2,500 jobs a week on average during the four weeks ending November 1.
Richmond Fed President Thomas Barkin noted on Tuesday, saying the labor market appears more balanced, with firms reporting improved worker availability and recent layoffs signalling the need for caution. Barkin said inflation doesn’t seem to be rising but it’s also unclear whether it will return to the Fed’s 2% target. He emphasized that, without more decisive data, it remains difficult to reach a broad policy consensus.
US President Donald Trump said in an Oval Office interview on Tuesday that he “would love” to remove Fed Chair Jerome Powell immediately. Trump added that he already has a preferred candidate in mind for the position, noting that there are “some surprising names” under consideration, though the administration may ultimately choose a more traditional option.
