Ella 
In Asia on Thursday, GBP/USD continued its upward trend, breaking through the 1.2800 mark. Declining inflationary pressures in the U.S. economy and dovish comments from the Federal Reserve pushed the dollar lower, providing some support for GBP/USD. As of press time, it recorded 1.2810, up 0.09% on the day.
The dollar remains under pressure as investors anticipate the Federal Reserve may cut interest rates soon. The Chicago Mercantile Exchange’s FedWatch tool shows that the market is currently pricing in a probability of more than 88% of an interest rate cut starting in March 2024, and expects the Fed to cut interest rates by more than 150 basis points (bps) next year.
On the other hand, the Bank of England (BOE) said that interest rate cuts in the UK are not over yet. The Bank of England kept interest rates on hold for a third consecutive meeting and insisted on keeping borrowing costs at 5.25% for some time. Central bank policymakers have previously said it was too early to talk about cutting interest rates. However, money markets expect the Bank of England to cut interest rates next year, with the first cut coming in May.
Affected by the holidays, market trading is light, and market risk sentiment before the New Year may continue to affect the trend of GBP/USD. Later on Thursday, U.S. initial jobless claims for last week, the trade balance and November existing home sales will be released. UK national housing prices and the US Chicago Purchasing Managers’ Index will be released on Friday.
