- During the Asian trading session on Friday, GBP/USD is expected to decline to around 1.3440.
- Traders are anticipating two rate cuts by the Federal Reserve this year.
- On Thursday, the Bank of England reduced interest rates from 4.25% to 4.0%, which was widely anticipated.
On Friday during Asian trading, the GBP/USD pair registered a slight drop, hovering around 1.3440. The US dollar seems to be gaining strength against the Pound Sterling (GBP), particularly after reports surfaced about Federal Reserve Governor Christopher Waller being a leading candidate to succeed Jerome Powell as Chairman of the Federal Reserve. Additionally, Fed’s Alberto Musalem is scheduled to make remarks later on Friday.
Bloomberg indicated last Thursday that Waller is a frontrunner for the next Fed Chair position. He had supported a 25 basis point rate cut last week, although his colleagues chose to maintain existing interest rates. Currently, traders see nearly a 93% chance of interest rate cuts in September, with expectations for at least two cuts by the end of the year.
In another development, US President Donald Trump has appointed Stephen Milan to replace Adriana Kugler on a federal committee following her surprising resignation last week.
At its August meeting on Thursday, the Bank of England (BOE) decided to cut rates from 4.25% to 4.0%. Still, among the nine policymakers, four are advocating for stability in costs, hinting that the BOE may soon pause further rate cuts.
The UK Central Bank has announced a “gradual and prudent approach” to lowering rates further, but it’s also noted that the restrictions of monetary policy have eased as bank rates decreased. A more dovish stance from the BOE might limit potential downside for the currency, according to data from LSEG.
