• The Pound Sterling recovers to near 1.3350 against the US Dollar as investors expect the Fed to cut interest rates by 50 bps in November.
• Investors await the Fed Powell’s speech on Thursday and the PCE inflation data for August on Friday.
• The BoE is expected to follow a shallow monetary policy-easing cycle.

The Pound Sterling (GBP) rebounds slightly from the key support near 1.3300 against the US Dollar (USD) in Thursday’s London session after correcting sharply on Wednesday. The GBP/USD finds cushion as investors have broadly underpinned the Pound Sterling against the Greenback due to firm speculation that the Federal Reserve’s (Fed) policy-easing cycle would be deeper and faster than the one to be followed by the Bank of England (BoE) in the remainder of the year.

According to the CME FedWatch tool, the central bank is expected to reduce its key borrowing rates further by 75 basis points (bps) in the remaining two meetings this year, suggesting that there will be one 50 bps and one 25 bps rate cut. 30-day Federal fund futures pricing data shows that the probability of the Fed reducing interest rates by a larger-than-usual margin in November has increased to 61% from 39% a week ago.

For fresh interest rate cues, investors will focus on speeches from various Fed policymakers, including Chair Jerome Powell, scheduled in the North American session. Last week, in the press conference after the monetary policy decision of the 50 bps interest rate cut, Powell emphasized remaining data-dependent for further policy action.

On the economic front, market participants await the United States (US) Personal Consumption Expenditure Price Index (PCE) data for August, which will be published on Friday. Signs of further slowdown in inflationary pressures would prompt market expectations of a Fed 50 bps interest rate cut, while hot figures would weaken them.