GBP/USD gains ground to near 1.3580 in Thursday’s Asian session.
Traders see the Fed will cut its borrowing costs by September.
The UK monthly GDP and US PPI data will take center stage later on Thursday.
The GBP/USD pair extends its upside to near 1.3580 during the Asian trading hours on Thursday. The cooler-than-expected US inflation data weighs on the US Dollar (USD) against the Pound Sterling (GBP). The UK monthly Gross Domestic Product (GDP) for April and the US Producer Price Index (PPI) report will be in the spotlight later on Thursday.
Traders raise their bets that the US Federal Reserve (Fed) will deliver a rate cut by September. Some analysts expect the Fed will deliver more than one interest-rate cut this year. This, in turn, exerts some selling pressure on the major pair.
Following the CPI report, traders have priced in 47 basis points (bps) of Fed easing by the end of the year, compared to about 42 bps before the CPI data, according to Bloomberg. While the Fed’s next move is fully priced in for October, traders increased expectations for a cut in September to around a 75% chance.
On the other hand, weaker UK employment data increased market expectations that the Bank of England (BoE) will cut interest rates by more than investors had projected earlier. This might cap the upside for the Cable in the near term. However, traders will take more cues from the UK monthly GDP data on Thursday, which is expected to shrink by 0.1% after expanding 0.2% in March. In case of a surprise upside in the UK GDP figure, this could underpin the GBP.
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