The Pound tests an August low on the Fed's hike odds
GBP/USD closed just beneath 1.3500 on Monday, 0.19% lower, after trading to its lowest since August 14 in the London morning and buying back half of the drop by the close.
On Monday, the GBP/USD currency pair closed just below 1.3500, marking its lowest level since August 14, before rebounding to just below that level by the end of the day. While the Dollar rose against every major currency, the Pound gave up less than the Euro. The Bank of England's nine-member rate committee will meet on Wednesday to decide on monetary policy, with the results published the following day at 11:00 GMT.
Labor market data released on Tuesday is expected to show a slight increase in unemployment to 5% from 4.9%, whilst claimant count is forecast to rise by 8.3K in August from an 11K decrease. Pay growth, including bonuses, is also predicted to slow to 3.9% from 4.1%. Inflation is forecast to rise to 3.1% in August, up from 2.9%, with core inflation at 2.7% and the retail price index at 3.5%.
The Bank of England's Gilt yield sales programme is expected to fall to £50 billion from £70 billion, with most of the reduction due to existing bonds maturing rather than active sales. The market's expectations are that the Dollar will not be able to outperform the Pound despite the Fed raising interest rates.
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