The GBP/USD pair inches higher ahead of the United Kingdom’s first quarter Gross Domestic Product data. It trades around 1.3720 during Asian hours on Monday. The pair may gain ground as the US Dollar may further depreciate.
Traders expect the Federal Reserve to cut rates at the September meeting. On Friday, data showed that US Personal Spending unexpectedly fell in May. This marked the second decline this year.
U.S. personal income also dropped by 0.4% in May, the largest decrease since September 2021. The week ahead will see the release of key US employment figures.
GBP/USD moves amid political tensions
These may further influence the Fed’s policy. The June US payrolls report is expected to show the economy added 110,000 new jobs, down from 135,000 in May. The unemployment rate is expected to rise slightly to 4.3% from 4.2%.
The GBP/USD pair also appreciates as the Pound Sterling receives support from the Bank of England’s cautious stance on rate cuts. Inflation in the UK remains stubborn, particularly core inflation. It has remained largely unchanged over the past year, causing concern among BoE officials and complicating rate cut decisions.
Meanwhile, political tensions have escalated in the UK. Prime Minister Keir Starmer scaled back welfare reform plans to contain rebellion by lawmakers in his governing Labour Party. Over 100 Labour MPs had publicly opposed the plan, which aimed to cut £5 billion annually from the soaring welfare budget.
