The Pound Sterling (GBP) consolidates in a tight range near the crucial resistance of 1.3400 against the US Dollar (USD) in Tuesday’s London session. The GBP/USD pair struggles for direction as investors await the United States (US) labor market data, which will provide fresh cues about how much the Federal Reserve (Fed) will reduce interest rates further this year.
The Fed started the policy-easing cycle with an interest rate cut of 50 basis points (bps) to 4.75%-5.00% on September 18. Policymakers decided to opt for a larger-than-usual cut amid growing concerns over slowing job growth and as confidence increases about inflation returning to the bank’s target of 2%.
To get cues about current labor market health, investors will pay close attention to the US ADP Employment Change and Nonfarm Payrolls (NFP) data for September, which will be published on Wednesday and Friday, respectively.
On Monday, Fed Chair Jerome Powell pushed back market expectations of an aggressive rate-cut cycle. "This is not a committee that feels like it is in a hurry to cut rates quickly,” Powell said at the National Association for Business Economics conference. "If the economy evolves as expected, that would be two more cuts by year's end, for a total reduction of half a percentage point more,” he added.
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