The GBP\/USD pair remains around 1.3330 in the Asian session as traders await the US inflation report. The upcoming US Personal Consumption Expenditures (PCE) Price Index for September may indicate the Federal Reserve’s interest rate path. <\/p>\n
Expectations for a rate cut by the Federal Reserve next week could affect the US Dollar. Interest rate futures traders have placed an 89% likelihood of a quarter-point rate cut by the Federal Reserve at its December meeting.<\/p>\n
GBP\/USD initially attempted to reach 1.3350 but retracted below this level, reducing earlier gains. Despite the Dollar Index’s seven-session decline, this has not fully translated into GBP\/USD advantages.<\/p>\n
The Federal Reserve’s decision on December 10 remains key, with a third consecutive rate cut anticipated by the market. Almost 90% odds are for a quarter-point cut next week, as official data lags post-federal shutdown. <\/p>\n
The Pound Sterling gained against the US Dollar in the American session, reaching 1.3367, its highest since late October. US data showed jobless claims dropped to 191,000, against predictions of 220,000. The decrease was from the previous 218,000 revised figures.<\/p>\n
With GBP\/USD holding steady around the 1.3330 mark, our focus shifts entirely to the Federal Reserve’s interest rate decision on December 10. The market is overwhelmingly positioned for a rate cut, which is expected to put downward pressure on the US dollar. We believe this creates a clear opportunity in the pound.<\/p>\n
The case for a Fed cut has strengthened considerably. The November Non-Farm Payrolls report, released this morning, showed a gain of only 85,000 jobs, missing the consensus estimate of 150,000 by a wide margin. This weak labor data, combined with last week’s core PCE inflation report which cooled to 3.2%, gives the Fed ample reason to ease policy.<\/p>\n
Given this outlook, the CME FedWatch Tool is now pricing in a 92% probability of a 25-basis-point rate cut next week, bringing the Fed funds rate to a target of 3.50%-3.75%. We are seeing traders respond by buying call options on GBP\/USD with strike prices around 1.3400 and 1.3450. These positions, expiring in late December and January, are a direct play on expected dollar weakness following the Fed announcement.<\/p>\n
This situation reminds us of the Fed’s easing cycle back in 2019, when a series of preemptive cuts led to a sustained rally in risk assets and a weaker dollar. While the jobless claims figures from the week ending November 29 were surprisingly strong at 191,000, the market is weighing the more recent and comprehensive payrolls data more heavily. We feel the underlying trend in the US economy is softening, supporting the case for a more dovish Fed.<\/p>\n
Therefore, derivative strategies should be structured to benefit from a rising GBP\/USD. Aside from simple call options, traders could consider bull call spreads to lower the upfront cost of the trade. The key will be managing positions through the Fed announcement on December 10, as implied volatility is likely to be high.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD hovers near 1.3330 as traders await PCE data; Fed rate cut expectations influence sentiment.<\/p>\n","protected":false},"author":62,"featured_media":17033,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-36093","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/36093","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=36093"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/36093\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17033"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=36093"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=36093"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=36093"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}