Pound Rebounds, UK Data Determines

GBP/USD strengthened after three consecutive days of declines. In Monday's Asian session, the pair traded around 1.3394, approaching the 1.3400 level, ahead of the release of UK Q3 GDP.

This strengthening occurred as the pound sterling attempted to hold its ground ahead of important economic data. However, its movement remains volatile as the market has already priced in expectations for the direction of future interest rates.

In the UK, the market is said to have fully priced in the Bank of England's (BoE) first interest rate cut in June 2026. Meanwhile, the chance of a cut in March is still considered relatively high at 40%, according to interest rate probability analyst Capital Edge.

In the US, the dollar has the potential to strengthen after Fed Chairman Jerome Powell signaled that an interest rate hike is unlikely in the near future. The Fed is said to be in a "wait-and-see" mode assessing economic data, and the dot plot shows the median expectation of only one additional interest rate cut in 2026. CME FedWatch listed the probability of rates being held at the January meeting at 79.0% (up from 75.6% last week), while the probability of a 25 bps cut fell to 21.0% (from 24.4%).

The market is also paying attention to US President Donald Trump's statement last week that the next Fed Chair will choose significantly lower interest rates. At the same time, Fed Governor Christopher Waller—who is said to be under consideration—reiterated his dovish stance on interest rates at a CNBC forum. (asd)

Source: Newsmaker.id